Mar 31, 2022
Your Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended March 31, 2022.
1. PERFORMANCE OF THE COMPANY 1.1 Results
Your Company''s performance for the year ended March 31, 2022 is as follows:
(''Millions) |
||
Particulars |
2021-22 |
2020-21 |
Net Sales |
9,148.25 |
8,913.31 |
Other Income* |
38.26 |
22.59 |
Total Income |
9,186.51 |
8,935.90 |
Operating Expenses |
8,625.79 |
8,318.59 |
PBDIT |
560.72 |
617.31 |
Depreciation |
203.71 |
180.04 |
Interest |
24.24 |
17.74 |
Profit before Tax & exceptional item |
332.77 |
419.53 |
Exceptional item |
20.11 |
- |
Profit Before Tax (PBT) |
352.88 |
419.53 |
Taxes |
92.07 |
116.51 |
Profit After Tax (PAT) |
260.81 |
303.02 |
Other Comprehensive income # |
0.27 |
7.66 |
Total Comprehensive income |
261.08 |
310.68 |
*Includes other operating revenue |
# Net of taxes
The Strategic Foods business of ATFL continued to show strong volume driven Revenue Growth of 15% closing the year with over '' 400 crore of Net Sales, though margins weakened due to significant commodity price increases. The improved competitiveness of the Premium Edible Oils business as a result of price corrections in FY''21 meant that the Company was able to arrest a multi-year decline in Oils Gross Margin. And lastly your Company further reduced the revenue exposure to commodity fluctuations with the franchising of the Crystal brand effective November, 2021.
FY''22 Gross Margin was lower than PY by ''10 Crore, with a ''13 Crore decrease in Foods GM partly offset by a ''3 crore increase in Edible Oils GM.
With a 15 year Revenue CAGR in the Foods business of 19% Your Company is clearly on track to be amongst India''s Best Performing Most Respected Food Companies. A diverse portfolio of products in 5 fast growing Food categories and superior value propositions combined with a moderate A&P model means that strong growth is clearly sustainable driven by powerful inhouse manufacturing capabilities, best in class distribution network and a robust flow of innovation.
Given the continued strong cash flow of the Company relative to the limited ongoing Capital Expenditure of the Company, your Directors are pleased to recommend a Dividend of '' 3/- per equity share of the face value of '' 1 0/- each for the year ended March 31, 2022 subject to the approval of the shareholders at the Annual General Meeting to be held on June 29, 2022.
STATEMENT OF RETAINED EARNINGS |
(''Millions) |
|
Particulars |
2021-22 |
2020-21 |
a) At the beginning of the year |
3,407.13 |
3,167.39 |
b) Add: Profit for the year |
260.81 |
303.02 |
c) Add: Other Comprehensive |
||
Income (net of tax) |
0.27 |
7.66 |
d) Less: Dividends* |
71.43 |
70.94 |
e) At the end of the year |
3,596.78 |
3,407.13 |
* Dividend given to Agro Tech ESOP Trust excluded of '' 1.68 mm (Previous year '' 2.16 mm).
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ''Listing Regulations''), the Company adopted a Dividend Distribution Policy vide its Board meeting held on 22nd July, 2021 in terms of the requirements of the Listing Regulations. The Policy is available on the Company''s website at https:/ /www.atfoods.com/pdf/code-of-conduct/ DividendDistributionPolicv.pdf.
3. RESPONSIBILITY STATEMENT The Directors confirm that :
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
FY''22 was the second year of Covid-19 and Your Company continued to navigate the pandemic in a manner that supported the safety of employees while undertaking the tasks required to support the Company''s strategic growth objectives. When required activities of vulnerable groups were restricted at the Factories and Field Sales and market working curtailed in the field to minimize risk to employees. Both the Corporate Office at Gurugram and the Registered Office at Secunderabad have been largely closed and employees encouraged to Work from Home. The last 2 years have seen significant supply chain challenges which the Company has successfully navigated to ensure continued strong growth in the Foods business. The war in Ukraine starting February, 2022 has further escalated uncertainties in the supply chain. However, your Company is confident that it will be able to navigate these new challenges and remain on track to join the ranks of India''s Best Performing Most Respected Food Companies with an increasingly diversified portfolio designed to mitigate risks and ensure a consistent and strong performance.
In terms of the Listing Regulations, a report on Corporate Governance along with Auditors'' Report on its compliance is annexed, forming part of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In line with the requirements of Companies Act, 2013, your Company has constituted the Board Committees and has in place all the statutory Committees required under the law.
Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.
6. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from members on the Annual Report and Accounts, this report includes MD&A as appropriate so that duplication and overlap between the Directors'' Report and a separate MD&A is avoided and the entire material is provided in a composite and comprehensive document.
7. INDUSTRY STRUCTURE & DEVELOPMENTS
Continued and increasing involvement by consumers with Packaged Foods means that the Food Industry is likely to demonstrate strong growth in the coming years. Key to securing a profitable slice of this pie will however be broad based manufacturing capabilities with a steady flow of innovation both of which will remain a focus for Your Company.
FY''22 continued to see significant disruption of the traditional trade by investments in the ecommerce space providing as well an opportunity for newer and smaller players in the Food industry. With the gradual lifting of restrictions and reduced fear we are steadily seeing a more normal behavior and increased stability at a channel level with the right balance between traditional trade, brick and mortar stores and the online space. The powerful distribution network that Your Company has built with a retail coverage of 440,000 stores will remain a significant moat to support our product portfolio in the categories of choice.
The continued growth of the Indian Foods market represents an enormous opportunity for a steady growth in Revenues and Profits for Your Company. The Company''s powerful Foods portfolio allows representation today in 5 fast growing categories -Ready to Cook Snacks, Ready to Eat Snacks, Spreads, Breakfast Cereals and Chocolates. Your Directors believe that these categories are sufficient to power the Company into one of the strongest Food Companies in India.
The primary threat to your Company''s P&L has been the significant contribution of the Edible Oils business. Over time however this has been significantly reduced and in FY''22 the Foods business contributed to 44% of Sales and 56% of Gross Margin.
9. STATE OF THE COMPANYâS AFFAIRS
Your Company has registered a consistent growth of 19% (CAGR) in the Foods business over the last 15 years through selective entry into fast growing categories.
With a continued focus on consumer acquisition
through a strong Value for Money proposition, your Company is able to deliver significantly superior products to competition at very competitive prices. This has enabled the Company to significantly expand the product portfolio including the launches in FY''22 of Ready to Cook Pasta & Noodle Kits and Peanut Centre Chocolates.
In FY''22 the Ready to Cook category successfully crossed the ''250 crore mark in Revenues. Increased competitive activity hindered the growth of the Spreads category but all other categories registered strong growth with necessary actions being taken on the Spreads business.
The Company was successfully able to leverage in FY''22 the high-quality Distribution Network in place with a coverage of 440,000 stores to enhance the distribution of its portfolio. Media spends however saw some moderation to help manage the significant commodity inflation the Company experienced during the year.
Your Company purchased land adjacent to two of its existing facilities during the year - at Kothur in Telangana and at Dhaka in Bangladesh. The land parcels will enable the Company to increase the storage capabilities for Raw Materials/expand Production Space and thereby improve efficiencies in the supply chain and support Growth.
10. PRODUCT CATEGORIES 10.1 Ready to Cook Snacks:
Revenues from the Ready to Cook Snacks business increased by 17% in FY''22 driven by a 14% Volume growth with enhanced Pricing on the premium ranges of Popcorn and Sweet Corn. The Company also introduced a range of Mini Meal Kits including Pasta and Noodles with Prepared Sauces. These have been very well received in the market and the Company will leverage the considerable expertise built in the development of the Popcorn category to expand the Meal Kits category.
10.2Ready to Eat Snacks:
Revenues from the RTE Snacks business were higher than PY by 20% driven largely by Volume Growth in the RTE Popcorn category where the Company saw reduced competitive intensity. With 100% of low cashring SKU''s of RTE Snacks now being shipped directly from the factories the focus is now on ensuring the right combination of Full Truck Load Product Mix with Distance from the Plants. FY''23 will also see the addition of Extruded Panned products which will further help to improve the P&L of this category.
10.3Spreads & Dips:
Revenues from the Spreads business decreased by 2% as a consequence of low volume growth in Peanut
Butter and price reductions in select SKU''s to bring back Volume Growth and gain the benefits of Operating Leverage at the Company''s plant at Jhagadia. The results of the actions are already visible in Modern Trade and E-Commerce where pricing realignment take less time to be implemented. In Traditional Trade as well competitive presence is beginning to wane and the Company expects to deliver the strong growth in FY''23.
10.4Breakfast Cereals:
Post the disruption caused by the 2nd Wave of Covid-19 the Company saw steady QOQ growth in this category as it seeks to build a profitable presence in the '' 3,500 crore Breakfast Cereals category. Focus is on distribution expansion and trial generation of the Company''s products which offer exceptional quality with outstanding value.
10.5Chocolates:
The Company saw continued strong growth in the Coconut Duo Chocolate product driven by the Rs. 10 offering. FY''23 also saw the commencement of testing of a Peanut Duo Variant which has also been extremely well received. Focus is now on increasing capacity with doubling of capacity planned in Q1, FY''23 and then doubling again in Q3, FY''23. The Company expects the category to be a sizeable and profitable contributor to the total Foods business going forward.
10.6Premium Edible Oils/Staples:
The Company''s new price premiums have been well accepted which is visible in the Volume Performance of FY''22. Work is now underway to assess how to use this Category to contribute not only in financial terms to the P&L but as well in operational terms in the development of the Foods business.
10.7Mass Edible Oils/Staples:
The Company further reduced the exposure to revenue fluctuations due to this category with the franchising of Crystal effective November, 2021. Going forward the Company will further evaluate options in this business.
11. RESEARCH, QUALITY & INNOVATION (RQI)
Innovation remains the driver of growth for your Company and we continue to make investments which ensure that we deliver to consumers products which address unmet consumer needs.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure A and forms part of this report.
13. HUMAN RESOURCES / INDUSTRIAL RELATIONS
Engaged Employees are critical to the success of your Company. In FY''22, your Company successfully achieved an Engagement Score of 78%. The continuing strong momentum in the Company driven by solid Foods growth and Innovation has helped to achieve this level.
Your Company will continue to ensure that we have a highly engaged and productive organization to deliver against our vision of being amongst "India''s Best Performing Most Respected Food Companies"
The details of significant changes in the key financial ratios are as follows:_
Particulars |
2021-22 |
2020-21 |
%Variance |
(i) Debtors Turnover Ratio |
15.73 |
15.95 |
(1.4%) |
(ii) Interest Coverage Ratio |
15.56 |
24.64 |
(36.9%) |
(iii) Current Ratio |
1.96 |
2.34 |
(16.3%) |
(iv) Inventory Turnover Ratio |
4.52 |
6.22 |
(27.3%) |
15. RETURN ON NET WORTH
The Return on Net worth as compared to the immediately previous financial year is as follows:
Particulars |
2021-22 |
2020-21 |
(i) Return on Net Worth |
5.67% |
6.98% |
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 thereunder in respect of the top ten employees in terms of remuneration drawn and employees who were in receipt of remuneration aggregating ''1.02 crores or more or were employed for part of the year and were in receipt of remuneration aggregating ''8.50 lakhs per month or more during the financial year ending March 31, 2022 is provided in the Annexure B forming part of this Report.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
18. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party
transactions, Companies Act, 2013 and Listing Regulations. Form AOC-2 containing the note on the aforesaid related party transactions is enclosed as Annexure C and forms part of this Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website.: https://www.atfoods.com/pdf/ code-of-conduct/policy dealing related party transactions.pdf
The related party disclosures, including detail of transaction with Promoter group, form part of the financial statements provided in this Annual Report.
19. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on July 25, 2012 had approved "Agro Tech Employee Stock Option Plan" ("Plan"). The Plan was further modified vide special resolution in the Annual General Meeting held on July 24, 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SEBI Regulations"). The Plan is further amended and approved by the Nomination and Remuneration Committee in its meeting held on April 28, 2022 to the extent to align it with the mandatory provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SeBI Regulations") and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust ("Trust") under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company ("Committee"). The Plan is in compliance with the provisions of SEBI Regulations. Further details of the Plan are available on the website of the Company at www.atfoods.com
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Spend on the Company''s Corporate Social Responsibility Program "Poshan" had to be curtailed due to closure of Anganwadi centers as a consequence of Covid-19.
For FY21-22, the total amount required to be spent under CSR during the year was '' 94,45,000/- which is 2% of average net profits of the Company during the three immediately preceding financial years as required under section 135 of the Companies Act, 2013 and relevant rules thereunder. The Company has transferred the required CSR amount of ''94,45,000/-to the Prime Minister''s National Relief Fund in the month of March, 2022. The unspent CSR amount of '' 95,84,450/- for FY20-21 was also transferred by the Company to Prime Minister''s National Relief Fund in the month of September 2021.
As per Companies Act, 2013 as amended by Companies (Amendment), Act, 2017, all Companies
having net worth of '' 500 crore or more, or turnover of '' 1,000 crore or more or a net profit of '' 5 crore or more during the immediately preceding financial year will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director. Aligning with the guidelines, the Company has constituted a CSR Committee comprising of Lt. Gen. D.B.Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani and Mr. James Patrick Kinnerk as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Company''s Website: https://www.atfoods.com/pdf/code-of-conduct/ ATFI%20CSR%20POIICY.pdf
The Annual Report on CSR activities is annexed here with as Annexure D and forms part of this Report.
The Company has formulated and adopted a revised Risk Management Policy which has been approved and adopted by the Board at the Board Meeting held on October 21, 2021 pursuant to SEBI (LODR) (Second Amendment) Regulations, 2021, which requires top one thousand listed Companies (based on market capitalization of every financial year) to formulate and disclose a Risk Management Policy. The testing in accordance with the laid down policy is being carried out periodically. The Senior Management has been having regular Meetings for reassessing the risk environment and necessary steps are being taken to effectively mitigate the identified risks. A Risk Management Committee also has been constituted with a Committee of the Directors and senior management to address issues which may threaten the existence of the company.
22. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The Vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on October 17, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company : https://www.atfoods.com/pdf/code-of-conduct/Whistle%20Blower%20Policv.pdf
Your Company continues to focus on the use of technology and automation to drive productivity to work efficiently with our Customers & Suppliers while making available to our Employees robust information to ensure best in class analysis of the business and identification of opportunities to improve shareholder return.
24. FINANCE AND ACCOUNTS 24.1 Internal Controls
The Company has a robust system of internal controls commensurate with the size and nature of its operations, to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, prevention, and detection of fraud and error, accuracy and completeness of accounting records, timely preparation of reliable financial information and adherence to the Company''s policies, procedures and statutory obligations.
Your Company has established standard operating procedures for smooth and efficient operations in addition to ensuring internal controls. Your Company has also documented:
⢠A comprehensive Code of Conduct for the Board Members and employees of your Company
⢠An Employee Handbook
⢠Whistle Blower Policy defined to provide channel of communication without fear
⢠Comprehensive frame work for Risk Management, and
⢠CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has appointed M/s. Grant Thornton Bharat I IP as Internal Auditors to ensure adequacy of internal control systems and make recommendations there to. Audit reports are circulated to management, which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the performance as reported by Auditors. The Internal and External Auditors also attend the meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee also issues directives and/or recommendations for enhancement in scope and coverage of specific areas, wherever felt necessary.
24.2. Cautionary Statement
Statements in this Directors'' Report and Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.
24.3 Outlook
With a Foods Turnover in excess of '' 400 crore and a proven 15 year CAGR of 19% your Company is clearly well positioned to be a major player in the Foods industry in India. This proposition is further strengthened by a strong portfolio and a powerful retail distribution network which will ensure that with a relentless pursuit of Revenue and Margin goals on the Foods business, your Company will become a significant player in the Indian Foods Industry and join the ranks of India''s Best Performing Most Respected Food Companies.
In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Mr. James Patrick Kinnerk retires by rotation and being eligible, offers himself for re-appointment. A brief profile of Mr. James Patrick Kinnerk is given in the notice of the 35th Annual General Meeting.
During the year, Ms. Denise Lynn Hansen had resigned as Director of the Company. The Directors placed on record their appreciation of the valuable services rendered and wise counsel given by Ms. Denise Lynn Hansen during her tenure of Office as Director.
Mr. Pedro Labayen de Inza is being appointed as an Additional Director of the Company pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 130 of the Articles of Association of the Company.
He holds office up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Mr. Pedro Labayen de Inza as Director of the Company at the Annual General Meeting. The Nomination and remuneration committee has recommended the appointment of Mr. Pedro Labayen de Inza as a Director of the Company.
A brief profile of Mr. Pedro Labayen de Inza is given in the notice of the 35th Annual General Meeting.
All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 and Regulation 25(8) of SeBI (LODR) Regulations, 2015 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they are or were not a promoter of the
Company or its holding, subsidiary or associate Company or member of the promoter group of the company;
ii. they are not related to promoters or other directors in the Company, its holding, subsidiary or associate Company;
c. they do not have or had any pecuniary transaction or relationship other than remuneration as such director or having transaction not exceeding ten percent of their total income or such amount as may be prescribed with the company, its holding, subsidiary or associate Company, or their promoters, or directors, during the three immediately preceding financial years or during the current financial year;
d. none of their relatives-
(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the three immediately preceding financial years or during the current financial year:
Provided that the relative may hold security or interest in the company of face value not exceeding '' fifty lakh or two per cent of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the three immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the three immediately preceding financial years or during the current financial year; or
(iv) has or had any other pecuniary transaction or relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two percent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may prescribed from time to time, whichever is lower, singly or in combination with the transactions referred to in sub-clause(i), (ii) or (iii) during the three immediately preceding financial years or during the current financial year.
e. neither they nor any of their relatives-
(i) hold or has held the position of a key
managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, ofâ
(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or
(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten percent or more of the gross turnover of such firm;
(iii) held together with any relatives two percent or more of the total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organization that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two percent or more of the total voting power of the Company;
(v) is a material supplier, service provider or customer or a lessor or lessee of the Company;
f. they are not a non-independent director of any other company on the board of which any nonindependent director of the Company is an independent director.
g. they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.
h. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company''s business.
. they have complied with the requirement of subrule (1) and sub-rule (2) of Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014 with regard to inclusion of their names
and/or renewal thereof, in the Independent Directors data bank maintained with Indian Institute of Corporate Affairs (IICA).
None of the independent Directors will retire at the ensuing Annual General Meeting.
The Board of Directors met 4 times during the period April to March in the year 2021-2022 on the following dates:
1. April 29, 2021
2. July 22, 2021
3. October 21, 2021
4. January 20, 2022
The Company''s Audit Committee presently comprises of five Directors, all are non-executive and Independent Directors. This is in compliance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Lt.Gen. D. B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
28. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Company''s Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability.
Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure B to this Report.
The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors.
The annual evaluation of the Board is done at three levels as (i) Board as a whole; (ii) Committees of the Board and (iii) Individual Directors and Chairperson.
A detailed Questionnaire is circulated to all individual directors. The Directors are evaluated on the basis of the following performance evaluation criteria namely knowledge and competency, fulfillment of functions, ability to function as a team, initiative, availability and attendance, commitment, contribution and Integrity. The Additional criteria for Independent directors are independence, independent views and judgment. The remuneration/commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non-Executive Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof, provided that the amount of such fees shall not exceed ''1,00,000/-('' One lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act. An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed here with as Annexure E and forms part of this Report and is also uploaded on the website of the Company: https://www.atfoods.com/pdf/code-of-conduct/Nomination%20and% 20Remuneration%20Policv.pdf
30. TRAINING OF INDEPENDENT DIRECTORS Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Company''s strategy, operations and products. The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. During the year, the Company has sponsored independent Directors for attending an online orientation programme conducted by National Institute of Securities Markets (NISM) on role of the Board, regulatory perspective on role & responsibilities of Directors etc. More details about familiarization Programme are uploaded on Company''s website: https://www.atfoods.com/pdf/ other-information/familiarisation programme independent directors.pdf
M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company by the shareholders'' at the 32nd Annual General Meeting held on July 17, 2019, to hold office from the conclusion of the 32nd Annual General Meeting till the conclusion of the 37th Annual General Meeting.
The Report given by the Auditors M/s Deloitte Haskins & Sells LLP, Chartered Accountants on the financial statements of the Company for financial year 2021- 22 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
The Company is required to maintain the cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained by the Company. An Audit of the Cost Accounts maintained by the Company is also conducted by a Cost Auditor appointed by the Board subject to the approval of Shareholders.
M/s. Tumuluru & Company, Company Secretaries Firm has been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (LODR) Regulations, 2015 and also to provide the Secretarial Compliance Report for the financial year 2021-22. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure F to this Director''s Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the Company''s expansion of distribution and display of your Company''s products. At the end of FY''22 the number of sales staff on the rolls of the Company were 379.
Your Company''s wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd continues to scale up production as we expand our business in a neighboring emerging market with strong growth potential.
Your Company will also be working towards leveraging your Company''s wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited at an opportune time
basis the economic developments in that market. During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2021-22 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed as Annexure G to this Report. The audited financial statements and related information of subsidiaries are available for inspection electronically and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Company is also available on the website of your Company. https:/ /www.atfoods.com/annual-reports.aspx
A copy of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 and Rule12 of the Companies (Management & Administration) Rules, 2014 prepared as on March 31, 2022 shall be placed on the website of the Company and the same is available in the Company''s website: https:// www.atfoods.com/investors-information.aspx
36. BUSINESS RESPONSIBILITY REPORT
SEBI (LODR) (Fifth Amendment) Regulations, 2019 notified on December 26, 2019 mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for top 1000 listed entities based on market capitalization. In compliance with the Regulation, the BRR for FY 2021-22 is provided as part of this Annual Report.
Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:
a. Details relating to deposits covered under Chapter V of the Act.
b. Issue of equity shares with differential rights as to dividend, voting or otherwise.
c. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.
d. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries.
e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.
f. The Company has complied with the provisions relating to constitution of Internal Complaints Committee and no cases reported or filed during
the year pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
g. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013.
h. Pursuant to Section 124 and Section 125 of the Companies Act 2013 read with IEPFA (Accounting, Audit, Transfer and Refund) Rules 2016 and any amendment thereof, as may be applicable, an amount of ?446,238/-which remained unpaid / unclaimed dividends pertaining to FY13-14 was transferred to Investor Education and Protection Fund on September 14, 2021.
i. During the year, the Company has transferred 8434 unclaimed shares to IEPF account on October 11, 2021. The detailed list of unclaimed shares transferred to IEPF Authority is available in the Company''s website www.atfoods.com
j. Pursuant to Section 124 and Section 125 of the Companies Act 2013 read with IEPFA (Accounting, Audit, Transfer and Refund) Rules 2016 and any amendment thereof, as may be applicable, an amount of '' 467,946/- (as on March 31, 2022) of unpaid/unclaimed dividends pertaining to FY 14-15 will be transferred to Investor Education and Protection Fund within the prescribed timelines.
K. Except as disclosed elsewhere in the Report, there have been no material changes and commitments made between the end of the financial year of the Company and the date of this Report. There has been no change in the nature of business of the Company during the year.
l. No application was made during the year and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) as at the end of the financial year.
m. No instance of the valuation was required for one time settlement and no valuation was done while taking the loan from the Banks or Financial Institutions.
The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.
On Behalf of the Board Sachin Gopal Lt. Gen. D.B. Singh
Managing Director & CEO Director
DIN 07439079 DIN 00239637
Place : Gurugram Date : April 28, 2022
Mar 31, 2019
The Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2019.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Companyâs performance for the year ended 31st March, 2019 is as follows:
(Rs. Millions)
2018-19 |
2017-18 |
|
Net Sales |
8,230.56 |
8,106.31 |
Other Income* |
42.55 |
19.78 |
Total Income |
8,273.11 |
8,126.09 |
Operating Expenses |
7,589.44 |
7,459.51 |
PBDIT |
683.67 |
666.58 |
Depreciation |
167.73 |
174.72 |
Interest |
0.94 |
2.53 |
Profit Before Tax (PBT) |
515.00 |
489.33 |
Taxes |
175.93 |
172.85 |
Profit After Tax (PAT) |
339.07 |
316.48 |
Other Comprehensive income |
(0.50) |
(0.03) |
Total Comprehensive income |
338.57 |
316.45 |
*Includes other operating revenue
Net Sales for the year were 2 % higher than Prior Year with the Foods share of our business increasing by c300 basis points to 27% of the total business. The Foods business reached a new high of c Rs. 225 crore with a 14% growth over Prior Year driven by robust growth in Act II Ready to Eat Snacks and Sundrop Peanut Butter supporting steady growth in the Act II Ready to Cook business. The steady growth of the Foods business reflects the continued solid progress being made by the Company to be amongst Indiaâs best performing most respected Foods Companies. PBT was up 5% vs PY and PAT was up 7% vs PY.
1.2 Key Indicators
For FYRs. 19 the Gross Margin and A&P figures are not comparable with figures for FYRs. 18 due to the implementation of GST. Key indicators for FYRs. 19 other than GM and A&P figures have been summarized below:
(Rs. Millions)
2018-19 |
2017-18 |
|
EBITDA |
8.3% |
8.2% |
Profit Before Tax |
6.3% |
6.0% |
Profit After Tax |
4.1% |
3.9% |
In FYRs. 19 the Company was able to successfully increase the Foods share of Revenues up to 27% and importantly the Foods share of Gross Margin reached a level of 33%. Simultaneously the Company successfully offset the margin compression that was seen on Edible Oils to continue to deliver profitable growth.
2. DIVIDEND
Given the continued strong cash flow of the Company relative to the limited ongoing Capital Expenditure of the Company, your Directors are pleased to recommend a Dividend of Rs. 2.50 per equity share of the face value of Rs. 10 each for the year ended March 31st, 2019 subject to the approval of the shareholders at the Annual General Meeting to be held on July 17th, 2019.
(Rs. Millions)
2018-19 |
2017-18 |
||
STATEMENT OF RETAINED EARNINGS |
|
||
a) |
At the beginning of the year |
2,634.90 |
2,374.86 |
b) |
Add: Profit for the year |
339.07 |
316.48 |
c) |
Add: Other Comprehensive |
(0.50) |
(0.03) |
Income (net of tax) |
|
||
e) |
Less: Dividends* |
58.42 |
46.49 |
f) |
Less: Dividends Distribution Tax |
12.52 |
9.92 |
g) |
At the end of the year |
2,902.53 |
2,634.90 |
*Dividend given to Agro Tech ESOP Trust excluded of |
|
||
Rs.2.51mm |
|
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Regulations, a report on Corporate Governance along with Auditorsâ Report on its compliance is annexed, forming part of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In line with the requirements of Companies Act, 2013, your Company has constituted the Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.
5. STATE OF THE COMPANYâS AFFAIRS:
To take advantage of the steady growth of the countryâs Food Business it has been important for your Company to build a cost effective supply chain both in terms of Manufacturing Capabilities and in terms of Retail Distribution which can support our growth ambitions. Today your Company has a manufacturing network of 5 plants across the country and retail distribution coverage of c 400,000 stores.
Our Manufacturing Capabilities today include plants at Jhagadia, Kashipur, Unnao, Kothur and Mangaldai enabling us to reach out to significant parts of the country in a cost effective manner. The resultant significant in house manufacturing capabilities are also ensuring a steady flow of innovation as reflected in products such as Act II Caramel Bliss and Peanut Butter & Jelly. In addition the philosophy of in house manufacturing also means that with continued growth of the Foods business we can be confident of improved operating leverage translating into superior margins.
Our goal is to have a 7 plant structure operational in India which we believe will offer us the ability to reach out to most markets in India in a cost effective manner. Our 6th plant is to come up at Chittoor, Andhra Pradesh for which significant civil work has already been completed. However, your Company deferred the startup of the facility in order to take advantage of available Capital subsidies in the state, approval for which was received in January 2019. We are therefore now working on capital purchases and expect that over the next 12 months this plant will become operational. In January 2019, your Company also received approval from the West Bengal Government for conversion of land for industrial use, for a plot of land purchased by us near Kolkata for our 7th plant and we will be initiating work on this in the coming year.
In addition to the 5 plant network mentioned above in FYRs. 19 your Company initiated commercial production at the plant in Dhaka, Bangladesh. Over time this plant will replace goods currently being imported into Bangladesh enabling us to offer improved value to consumers in Bangladesh and setting the foundation for a solid business in a fast growing neighbor of India.
FYRs. 19 saw an unfortunate incident of fire at our Unnao Foods facility. The plant was fully insured and we have already received a part of our claim from the insurer. We are now working on rebuilding the plant which we expect will be done in FYRs. 20.
In terms of Distribution, the powerful retail distribution network that we have built up with a retail coverage of c 400,000 stores means that we have the ability to deliver profitable growth since retailing is critical to selling value added products with the promise of higher margin. In FYRs. 19 we added approx. 100 Distributors to our FYRs. 18 base of 925 Distributors. Importantly this network is being increasingly strengthened because of our larger portfolio making the sales infrastructure less dependent on Company Subsidies and Company investment in Feet on Street. Going forward, this will be a significant competitive advantage since the cost of building a national distribution network is going to increase disproportionately with higher labor costs and therefore become a powerful advantage for those Companies that have already built a sustainable distribution network.
The task of laying out the infrastructure to become one of Indiaâs Best Performing Most Respected Foods Companies is a continuous one. However, we believe that we are well placed today both in terms of Manufacturing & Distribution. An increasing share of our output will now come from Brownfield projects making the task much easier in implementation terms. Simultaneously the larger product portfolio now means that we go to new Distributors with the promise of immediate profitability again making the task easier and feasible at a lower cost than we have incurred for the initial ramp up of Distribution.
6. PRODUCT CATEGORIES
6.1 Ready to Cook Snacks:
Revenues from the RTC Snacks business increased by 5% during FYRs. 19 with a Volume Growth of 3% as our investments behind the business were lower as a result of Gross Margin compression on the Oils business. We believe that with continued focus on Demonstration and Display and expansion of the Act II brand into related RTC categories this growth rate will be significantly accelerated.
6.2 Ready to Eat Snacks:
Revenues from the RTE Snacks business increased by 63% driven by an 83% increase in Volumes. All 3 categories of RTE Popcorn, Extruded Snacks and Tortilla Chips performed well and contributed to the growth, though the highest growth was in the area of RTE Popcorn where we have the greatest competitive advantage. This category will remain critical to us in the long term since it offers the greatest expansion of profitability for our Distributor Partners and naturally forces widespread retail coverage expansion on the back of which we are able to drive products such as Ready to Cook Snacks & Spreads.
6.3 Spreads:
Revenues from the Peanut Butter business increased by 21% with a Volume growth of 33%. Whilst this segment saw significant competitive activity our in house manufacturing capabilities which resulted in a competitive cost structure and high levels of innovation enabled us to maintain clear leadership. In FYRs. 20 we expect to widen our product offerings within this category with the introduction of other Nut Butters and Chocolate Spreads.
6.4 Edible Oils:
In FYRs. 19, Revenues from the Sundrop Edible Oils business were 4% lower than PY with Volumes lower by 5% reflecting the Price & Margin compression at the top end of the market. Revenues for the Crystal brand were however 10% higher (Volumes 2% lower) than PY reflecting the impact of imposition of import duties on the lower end of the Edible Oils market. We will continue to manage the Edible Oils category with minimal investments which enable us to support strong growth of the Foods business.
7. RESEARCH, QUALITY & INNOVATION (RQI)
The focus on in house manufacturing and resultant flow of information and unlocking of possibilities including network effects, has meant that FYRs. 19 was a year in which the Company was able to advance significantly in terms of portfolio diversification. Some of these products have already been launched such as Peanut Butter & Jelly, Premium Caramel Bliss variants, âBetter for Youâ variants in Peanut Butter and Ready to Eat Cereal Snacks.
Innovation will continue to be the driver of growth for your Company and we will make investments which ensure that we deliver to consumers products which meet their changing needs.
8. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE AND EMPLOYEE PARTICULARS
A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as annexure and forms part of this report.
9. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 thereunder in respect of the top ten employees in terms of remuneration drawn and employees who were in receipt of remuneration aggregating Rs. 1.02 crores or more or were employed for part of the year and were in receipt of remuneration aggregating Rs. 8.50 lakhs per month or more during the financial year ending 31st March, 2019 is provided in the Annexure forming part of this Report.
10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
11. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions, Companies Act, 2013 and Listing Regulations. Form AOC-2 containing the note on the aforesaid related party transactions is enclosed as Annexure and forms part of this Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website.:http://www.atfoods.com/ templates/home_tpl/pdf/other_info/ policy_dealing_related_party_transactions.pdf
The related party disclosures, including detail of transaction with Promoter group, form part of the financial statements provided in this Annual Report.
12. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on 25th July 2012 had approved âAgro Tech Employee Stock Option Planâ (âPlanâ). The Plan was further modified vide special resolution in the Annual General Meeting held on 24th July 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (âSEBI Regulationsâ) and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust (âTrustâ) under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company (âCommitteeâ). The Plan is in compliance with the provisions of SEBI Regulations and there has been no material change in the Plan during the year. Further details of the Plan are available on the website of the Company at www.atfoods.com.
13. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has continued to drive the Corporate Social Responsibility program under Poshan where we provide Peanut Butter to under nourished children. Major focus area for implementation of this program is Bharuch district in Gujarat, where our Peanut Butter factory is situated. Apart from Gujarat, the program is also under implementation in Delhi, Hyderabad, Kashipur and Kolkata where our offices and factories are located. Anganwadi operations have got stabilized and spending behind the program this year has significantly increased by about 184% over the previous year. Spending for the year behind the program remained lower than the 2% of average Net Profit of last three financial years to be spent behind CSR activities but with the increasing spends year on year, we are progressing towards this goal.
As per the Companies Act, 2013 as amended by Companies (Amendment), Act, 2017, all Companies having net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during the immediately preceding financial year will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director. Aligning with the guidelines, the Company has constituted a CSR Committee comprising Lt. Gen. D B Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, Ms. Denise Lynn Dahl, Ms. Jill Ann Rahman and Mr. Hendrik Gerhardus Myburgh@ as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Companyâs Website:http:/ /www.atfoods.com/templates/home_tpl/pdf/ other_info/ATFL%20CSR%20POUCY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.
@ Mr. Hendrik Gerhardus Myburgh resigned as Member on 6th December, 2018.
14. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on 17th October, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company:http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.pdf
15. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation to drive productivity to work efficiently with our Customers & Suppliers while making available to our Employees robust information to ensure best in class analysis of the business and identification of opportunities to improve shareholder return.
16. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Ms. Jill Ann Rahman retires by rotation and being eligible, offers herself for reappointment. A brief profile of Ms. Jill Ann Rahman is given in the notice of the 32nd Annual General Meeting.
Mr. Hendrik Gerhardus Myburgh has resigned as Director of the Company. The Directors place on record their appreciation of the valuable services rendered and wise counsel given by Mr. Hendrik Gerhardus Myburgh during his tenure of Office as Director.
All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 and Regulation 25 (8) of SEBI (LODR) Regulations, 2015 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they are or were not a promoter of the Company or its holding, subsidiary or associate Company or member of the promoter group of the company;
ii. they are not related to promoters or other directors in the Company, its holding, subsidiary or associate Company;
c. they do not have or had any pecuniary transaction or relationship other than remuneration as such director or having transaction not exceeding ten per cent of their total income or such amount as may be prescribed with the company, its holding, subsidiary or associate Company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
d. none of their relatives -
(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year:
Provided that the relative may hold security or interest in the company of face value not exceeding fifty lakh rupees or two per cent of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; or
(iv) has or had any other pecuniary transaction or relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may prescribed from time to time, whichever is lower, singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii) during the two immediately preceding financial years or during the current financial year.
e. neither they nor any of their relatives -
(i) hold or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, ofâ
(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or
(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten per cent or more of the gross turnover of such firm;
(iii) held together with any relatives two per cent or more of the total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per cent or more of the total voting power of the Company;
(v) is a material supplier, service provider or customer or a lessor or lessee of the Company;
f. they are not a non-independent director of any other company on the board of which any nonindependent director of the Company is an independent director.
g. they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.
h. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the companyâs business.
The Companies Act, 2013 provides for appointment of Independent Directors. Section 149(10) and (11) of the Act provides that Independent Directors shall hold office for a term of up to five consecutive years on the Board of a Company, but shall be eligible for reappointment on passing of a special resolution by the company. However no Independent Director shall be eligible for more than two consecutive terms of five years. The Act also specifies that the provisions of retirement by rotation as defined under Section 152 (6) and (7) shall not apply to such Independent Directors.
Lt. Gen. D B Singh, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani were appointed as non-executive and Independent Directors by the shareholdersâ at the 27th Annual General Meeting held on July 17, 2014, for a consecutive term of five years till July 2019, not liable to retire by rotation.
On 24th April, 2019, the Nomination and Remuneration Committee recommended and Board of Directors accorded their consent for the re-appointment of Lt. Gen. D B Singh, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani as non-executive and Independent Directors for one more consecutive term of 5 years not liable to retire by rotation, subject to the Shareholdersâ approval.
A brief profile of all the above Directors is given in the notice of the 32nd Annual General Meeting.
17. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2018-2019 on the following dates:
1. 25th April, 2018
2. 26th July, 2018
3. 24th October, 2018
4. 22nd January, 2019
18. AUDIT COMMITTEE
The Companyâs Audit Committee presently comprises of six Directors, all except one are non-executive and Independent Directors. This is in compliance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Lt. Gen. D.B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr.Narendra Ambwani, Mr. Arun Bewoor, Ms. Denise Lynn Dahl and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
19. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Companyâs Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure to this Report.
20. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors.
The annual evaluation of the Board is done at three levels as (i) Board as a whole; (ii) Committees of the Board and (iii) Individual Directors and Chairperson. A detailed Questionnaire is circulated to all individual directors. The Directors are evaluated on the basis of the following performance evaluation criteria namely Knowledge and Competency, Fulfillment of functions, Ability to function as a team, Initiative, Availability and attendance, Commitment, Contribution and Integrity. The Additional criteria for Independent directors are Independence, Independent views and judgment.
The remuneration / commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non- Executive / Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs. 1,00,000/-(Rupees one lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act.
An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed as part of this Report and is also uploaded on the website of the Company,http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf
21. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Companyâs strategy, operations and products.
The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. The appointment letters issued to independent directors is uploaded on the website,http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ terms_conditions_appointment_independent_directors.pdf
22. AUDITORS
As per the provisions of Section 139 (2)(b) of the Companies Act, 2013, no audit firm shall be eligible for appointment/reappointment for more than two terms of five consecutive years. Accordingly, M/s B S R & Associates LLP, has completed its term as per Section 139 (2)(b) and shall not be eligible for reappointment as auditor.
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, are recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 32nd Annual General Meeting to the conclusion of the 37th Annual General Meeting in place of M/s. B S R & Associates LLP, retiring auditors who were not eligible to be reappointed. The Company has received a certificate from M/s.Deloitte Haskins & Sells LLP to the effect that their appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014. The Company has received a certificate from M/s. Deloitte Haskins & Sells LLP to the effect that they are not disqualified to be appointed and to act as Auditors in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014.
The Report given by the existing Auditors, M/s. B S R & Associates LLP., Chartered Accountants on the financial statements of the Company for financial year 2018-19 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
23. COST AUDIT
The Company is required to maintain the cost records as specified by the Central Government under Section 148 (1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained by the Company. An Audit of the Cost Accounts maintained by the Company is also conducted by a Cost Auditor appointed by the Board subject to the approval of Shareholders.
24. SECRETARIAL AUDIT
M/s. Tumuluru & Company, Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (LODR) Regulations, 2015 for the financial year 2018-19. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure to this Directorâs Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
25. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FYRs. 19 the number of sales staff on the rolls of the Company were 424.
Your companyâs wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd has commenced production in FYRs. 18. This has enabled the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market.
Your Company will also be working towards leveraging your Companyâs wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited and seek to establish a local low cost production model which will enable us to benefit from the growth of our neighboring countries.
During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2018-19 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Companies is also available on the website of your Company. http://www.atfoods.com/ investor-relations/annual-reports.html.
26. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2019 is attached as an Annexure to this Directorsâ Report.
27. GENERAL
Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.
4. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
6. The Company has complied with the provisions relating to constitution of Internal Complaints Committee and no cases reported or filed during the year pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
7. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013.
8. In terms of provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs.4,30,813.25/- (as on 31st March, 2019) of unpaid /unclaimed dividends will be transferred to Investor Education and Protection Fund.
9. During the year the Company has transferred 7,657 unclaimed shares to IEPF account on 30th October, 2018. The detailed list of unclaimed shares transferred to IEPF Authority is available in the Companyâs website www.atfoods.com
28. APPRECIATION
The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.
On Behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
Managing Director & CEO Director
DIN 07439079 DIN 00239637
Dt: 24th April, 2019
Mar 31, 2018
The Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2018.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Companyâs performance for the year ended 31st March, 2018 is as follows:
(Rs. Millions)
2017-18 |
2016-17 |
|
Net Sales |
8,106.31 |
8,060.03 |
Other Income* |
19.78 |
24.37 |
Total Income |
8,126.09 |
8,084.40 |
Operating Expenses |
7,459.51 |
7,476.17 |
PBDIT |
666.58 |
608.23 |
Depreciation |
174.72 |
165.11 |
Interest |
2.53 |
44.45 |
Profit before Tax & |
||
exceptional item |
489.33 |
398.67 |
Exceptional item |
- |
42.09 |
Profit Before Tax (PBT) |
489.33 |
440.76 |
Taxes |
172.85 |
167.79 |
Profit After Tax (PAT) |
316.48 |
272.97 |
Other Comprehensive income |
(0.03) |
1.27 |
Total Comprehensive income |
316.45 |
274.24 |
*Includes other operating revenue Net Sales for the year were 1 % higher than Prior Year with the Foods share of our business increasing by 300 basis points to 24.4% of the total business. The Foods business reached a new high of Rs.197 crore with a 15% growth over Prior Year driven by continued strong growth in Sundrop Peanut Butter and robust growth in Act II Bagged Snacks. Excluding channels which had tax exemption prior to the implementation of GST, the growth in the Foods business was closer to 20% reflecting the continued solid progress being made by the Company to be amongst Indiaâs best performing most respected Foods Companies. PBT was up 11% vs PY and PAT was up 16% vs PY.
1.2 Key Indicators
Due to the implementation of GST and consequent pass on of benefits accrued due to replacement of Service Tax, the Gross Margin and A&P figures for the year are not comparable with Prior Year. Accordingly the key indicators given below relate to EBITDA.
(Rs. Millions)
2017-18 |
2016-17 |
|
EBITDA (Rs MM) |
666.58 |
608.23 |
EBITDA% |
8.2% |
7.5% |
EBITDA increased by 0.7% vs. FYâ17 with EBITDA% improving by 70 basis points. The drivers of EBITDA improvement remain the enhancement of Operating Leverage as we gain scale in the Foods business of the Company and increase capacity utilizations to benefit from the significant investments already made. The primary drag on EBITDA margin remains the Edible Oils business the materiality of which is steadily decreasing as we continue to build the Foods business with strong moats and consequent margin opportunities.
2. DIVIDEND
Given the continued strong cash flow of the Company relative to the limited ongoing Capital Expenditure of the Company, your Directors are pleased to recommend a Dividend of Rs.2.50 per equity share of the face value of Rs.10 each for the year ended 31st March, 2018 subject to the approval of the shareholders at the Annual General Meeting to be held on 26th July, 2018.
(Rs. Millions)
2017-18 |
2016-17 |
||
STATEMENT OF RETAINED EARNINGS |
|||
a) |
At the beginning of the year |
2,374.86 |
2,157.03 |
b) |
Add: Profit for the year |
316.48 |
272.97 |
c) |
Add: Other Comprehensive |
(0.03) |
1.27 |
Income (net of tax) |
|||
e) |
Less: Dividends* |
46.49 |
46.49 |
f) |
Less: Dividends Distribution Tax |
9.92 |
9.92 |
g) |
At the end of the year |
2,634.90 |
2,374.86 |
*Dividend given to Agro Tech ESOP Trust excluded of Rs.2.25 mm.
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Regulations, a report on Corporate Governance along with Auditorsâ Report on its compliance is annexed, forming part of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In line with the requirements of new Companies Act, 2013, your Company has constituted new Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.
5. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE AND EMPLOYEE PARTICULARS
A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as annexure and forms part of this report.
6. HUMAN RESOURCES / INDUSTRIAL RELATIONS
As of end FYâ18 your Company had increased the Feet on Street employed to 502 up from 386 at the end of FYâ17. This significant number has enabled us to drive aggressively the Foods business which registered revenues of Rs.197 crore in FYâ18.
Your Company will continue to ensure that we have a highly engaged and productive organization to deliver against our vision of being amongst âIndiaâs Best Performing Most Respected Food Companiesâ
7. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 thereunder in respect of the top ten employees in terms of remuneration drawn and employees who were in receipt of remuneration aggregating â1.02 crores or more or were employed for part of the year and were and in receipt of remuneration aggregating Rs.8.50 lakhs per month or more during the financial year ending 31st March, 2018 is provided in the Annexure forming part of this Report.
8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
9. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions, Companies Act, 2013 and Listing Regulations.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website.:http://www.atfoods.com/ templates/home_tpl/pdf/other_info/ policy_dealing_related_party_ transactions.pdf
The related party disclosures form part of the financial statements provided in this Annual Report.
10. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on 25th July 2012 had approved âAgro Tech Employee Stock Option Planâ (âPlanâ). The Plan was further modified vide special resolution in the Annual General Meeting held on 24th July 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (âSEBI Regulationsâ) and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust (âTrustâ) under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company (âCommitteeâ). The Plan is in compliance with the provisions of SEBI Regulations and there has been no material change in the Plan during the year. Further details of the Plan are available on the website of the Company at www.atfoods.com.
11. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has continued to drive the Corporate Social Responsibility program under Poshan where we provide Peanut Butter to under nourished children. Major focus area for implementation of this program is Bharuch district in Gujarat, where our Peanut Butter factory is situated. Apart from Gujarat, the program is also under implementation in Delhi, Hyderabad, Kashipur and Kolkata where our offices and factories are located. Spending for the year behind the program remained lower than the 2% goal and lower than Prior Year due to disruptions in the Anganwadi network through which the program is executed. This disruption is now over and in FYâ19 we expect to increase our spending as we progress towards our goal of 2% of average Net Profit of last three financial years to be spent behind CSR activities.
As per the Companies Act, 2013 as amended by Companies (Amendment), Act, 2017, all Companies having net worth of Rs.500 crore or more, or turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more during the preceding three financial years will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director. Aligning with the guidelines, the Company has constituted a CSR Committee comprising Lt. Gen. D B Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, Mr. Steven Lee Harrison@, Ms. Denise Lynn Dahl, Ms. Jill Ann Rahman and Mr. Hendrik Gerhardus Myburgh* as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Companyâs Website:http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.
@ Mr. Steven Lee Harrison resigned as Member on 31st July, 2017
* Mr. Hendrik Gerhardus Myburgh has been appointed as Member on 25th October, 2017
12. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization framework which has been adopted by the Board at the Board Meeting held on 1st May 2006. The Company has framed a risk management policy and testing in accordance with the laid down policy is being carried out periodically. The Senior Management has been having regular Meetings for reassessing the risk environment and necessary steps are being taken to effectively mitigate the identified risks. A Risk Management Committee also has been constituted with a Committee of the Directors and senior management to address issues which may threaten the existence of the company.
13. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on 17th October, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company:http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.pdf
14. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation to drive productivity to work efficiently with our Customers & Suppliers while making available to our Employees robust information to ensure best in class analysis of the business and identification of opportunities to improve shareholder return.
15. FINANCE AND ACCOUNTS
15.1 Internal Controls
The Company has a robust system of internal controls commensurate with the size and nature of its operations, to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, prevention, and detection of fraud and error, accuracy and completeness of accounting records, timely preparation of reliable financial information and adherence to the Companyâs policies, procedures and statutory obligations.
Your Company has established standard operating procedures for smooth and efficient operations in addition to ensuring internal controls. Your Company has also documented:
- a comprehensive Code of Conduct for the Board Members and employees of your Company
- An Employee Handbook
- Whistle Blower Policy defined to provide channel of communication without fear
- Comprehensive framework for Risk Management, and
- CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has appointed Internal Auditors to ensure adequacy of internal control systems and make recommendations thereto. Audit reports are circulated to management, which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the performance as reported by Auditors. The Internal and External Auditors also attend the meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee also issues directives and/or recommendations for enhancement in scope and coverage of specific areas, wherever felt necessary.
15.2. Cautionary Statement
Statements in this Directorsâ Report and Management Discussion and Analysis describing the Companyâs objectives, projections, estimates and expectations may constitute âforward looking statementsâ within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.
15.3 Outlook
Your Company has reached an important threshold level with the Foods business now accounting for about a quarter of our Revenues and achieving some scale at a level of close to Rs.200 crore. This puts us in a strong position to work towards our next goal of taking the Foods business to 50% of our Revenues and transforming the Company away from being a commodities dependent organization to being a powerful branded Foods player and being amongst Indiaâs Best Performing Most Respected Food Companies.
16. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Ms. Denise Lynn Dahl retires by rotation and being eligible, offers herself for reappointment. A brief profile of Ms. Denise Lynn Dahl is given in the notice of the 31st Annual General Meeting.
Mr. Steven Lee Harrison has resigned as Director of the Company. The Directors placed on record their appreciation of the valuable services rendered and wise counsel given by Mr. Steven Lee Harrison during his tenure of Office as Director.
Mr. Hendrik Gerhardus Myburgh was appointed as an Additional Director of the Company pursuant to the provisions of Section 161(1) of the Companies Act, 2013 as amended and Article 130 of the Articles of Association of the Company. He holds office up to the date of the ensuing Annual General Meeting.
A brief profile of Mr. Hendrik Myburgh is given in the notice of the 31st Annual General Meeting.
All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they were neither are a promoter of the
Company or its holding, subsidiary or associate Company;
ii. they are not related to promoters or other directors in the Company, its holding, subsidiary or associate Company;
c. they do not have any pecuniary relationship other than remuneration as such director or having transaction not exceeding ten per cent of their total income or such amount as may be prescribed with the company, its holding, subsidiary or associate Company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
d. none of their relatives -
(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year:
Provided that the relative may hold security or interest in the company of face value not exceeding fifty lakh rupees or two per cent of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; or
(iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two per cent or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii).
e. neither they nor their relatives -
(i) hold or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, ofâ
(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or
(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten per cent or more of the gross turnover of such firm;
(iii) held together with any relatives two per cent or more of the total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per cent or more of the total voting power of the Company;
f. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the companyâs business.
None of the independent Directors will retire at the ensuing Annual General Meeting.
17. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2017-2018 on the following dates:
1. 3rd May, 2017
2. 26th July, 2017
3. 25th October, 2017
4. 16th January, 2018
18. AUDIT COMMITTEE
The Companyâs Audit Committee presently comprises of six Directors, all except one are non-executive and Independent Directors. This is in compliance with the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Lt. Gen. D.B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Denise Lynn Dahl and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
19. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Companyâs Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure to this Report.
20. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors.
The annual evaluation of the Board is done at three levels as (i) Board as a whole; (ii) Committees of the Board and (iii) Individual Directors and Chairperson. A detailed Questionnaire is circulated to all individual directors. The Directors are evaluated on the basis of the following performance evaluation criteria namely Knowledge and Competency, Fulfillment of functions, Ability to function as a team, Initiative, Availability and attendance, Commitment, Contribution and Integrity. The Additional criteria for Independent directors are Independence, Independent views and judgement. The remuneration / commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non- Executive / Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed â1,00,000 (Rupees one lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed as part of this Report and is also uploaded on the website of the Company,http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf
21. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Companyâs strategy, operations and products.
The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. The appointment letters issued to independent directors is uploaded on the website,http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ terms_conditions_appointment_independent_ directors.pdf.
22. AUDITORS
M/s. B S R & Associates LLP, Chartered Accountants, were recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 27th Annual General Meeting to the conclusion of the 32nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the Auditorsâ appointment has to be ratified at every Annual General Meeting. Accordingly, the appointment of M/s. BSR & Associates LLP, Chartered Accountants, as the statutory auditors of the Company, is placed for ratification by the shareholders. The Company has received a certificate from M/s. BSR & Associates, LLP to the effect that they are not disqualified from continuing to act as Auditors and would be in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014. The Report given by the Auditors, M/s. BSR & Associates LLP., Chartered Accountants on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
23. SECRETARIAL AUDIT
M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the financial year 2017-18. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure to this Directorâs Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
24. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FYâ18 the number of sales staff on the rolls of the Company were 502.
Your companyâs wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd has commenced production in FYâ18. This will enable the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market in FYâ19.
In FYâ19 we will also be working towards leveraging your Companyâs wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited and seek to establish a local low cost production model which will enable us to benefit from the growth of our neighboring countries.
During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2017-18 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Companies is also available on the website of your Company. http://www.atfoods.com/ investor-relations/annual-reports.html.
25. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2018 is attached as an Annexure to this Directorsâ Report.
26. GENERAL
Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.
4. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
6. No cases reported or filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
7. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013.
8. In terms of provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs.0.43 Million (as on 31st March, 2018) of unpaid /unclaimed dividends will be transferred to Investor Education and Protection Fund.
9. During the year the Company has transferred 136407 unclaimed shares to IEPF account on 27th December, 2017. The detailed list of unclaimed shares transferred to IEPF Authority is available in the Companyâs website www.atfoods.com
27. APPRECIATION
The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.
On Behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
Managing Director & CEO Director
DIN 07439079 DIN 00239637
Dt: 25th April, 2018
Mar 31, 2017
Your Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2017.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Company''s performance for the year ended 31st March, 2017 is as follows:
(Rs. Millions)
|
2016-17 |
2015-16 |
Net Sales |
8,043.19 |
7,801.94 |
Other Income |
23.67 |
20.16 |
Total Income |
8,066.86 |
7,822.10 |
Operating Expenses |
7,433.38 |
7,252.80 |
PBDIT |
633.48 |
569.30 |
Depreciation |
172.24 |
160.12 |
Interest |
45.48 |
53.28 |
Profit before Tax and |
|
|
exceptional item |
415.76 |
355.90 |
Exceptional item |
42.09 |
- |
Profit Before Tax (PBT) |
457.85 |
355.90 |
Taxes |
168.28 |
122.31 |
Profit After Tax (PAT) |
289.57 |
233.59 |
Net Sales for the year at Rs. 8,043.19 MM were 3% higher than Prior Year. This reflected a continued strong growth in the 3 core categories of Act II Ready to Cook Popcorn, Act II Nachoz and Sundrop Peanut Butter which increased revenues by 13% on a consolidated basis to reach a turnover of c Rs.150 crore. Sundrop Oils & Crystal Oils grew by 3% and 4% respectively while the Vending Business declined by 64%. Your Company continues to refine the business model for Ready to Eat Popcorn and Extruded Snacks which in addition to providing a platform for overall growth will also begin to be growth drivers in their own right with refinement of the model. Profit Before Tax & exceptional item increased by 17% driven by improved Gross Margin and lower Interest Costs, while Profit After Tax increased by 24% benefiting from a higher Profit Before Tax and Interest on Income Tax refund of Rs. 42.09 MM partially offset by an Income Tax disallowance pertaining to the period 2012-2015 increasing our Income Tax payout by Rs.14.5 MM.
1.2 Key Indicators
(Rs. Millions)
|
2016-17 |
2015-16 |
Gross Margin (GM) |
1,880.66 |
1,826.48 |
GM % |
23.4% |
23.4% |
Advertising & Sales Promotion |
412.76 |
426.50 |
A&P % |
5.1% |
5.5% |
Gross Margin increased by 3% in line with the increase in Net Sales resulting in GM% steady at 23.4%. This reflects largely the impact of a steadily growing GM on the core drivers of Act II Ready to Cook Popcorn, Act II Nachoz and Sundrop Peanut Butter. The strong double digit growth in revenue in these categories reflects a working combination of continued distribution expansion, steady investments in media and a strong value proposition.
2. DIVIDEND
Given the continued strong performance of the Company, your Directors are pleased to recommend a Dividend of Rs. 2/- per equity share of the face value of Rs. 10/- each for the year ended 31st March, 2017 subject to the approval of the shareholders at the Annual General Meeting to be held on 26th July, 2017.
(Rs. Millions)
|
2016-17 |
2015-16 |
Profit after Tax |
289.57 |
233.59 |
Profit brought forward from |
2,275.56 |
2,041.97 |
Previous year |
|
|
Surplus available for |
2,565.13 |
2,275.56 |
Appropriation |
|
|
Dividend paid at the rate of |
|
|
Rs. 2 /- each* |
48.74 |
- |
Dividend Distribution Tax |
9.92 |
- |
Forward to the following year |
2,506.47 |
2,275.56 |
*Dividend related to FY 15-16 paid in current year. Also refer note no. 2.2 in notes to accounts.
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c)they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safe guarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) They have prepared the annual accounts on a going concern basis;
(e) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Regulations, a report on Corporate Governance along with Auditors'' Report on its compliance is annexed, forming part of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) 2015.
In line with the requirements of new Companies Act, 2013, your Company has constituted new Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.
10. RESEARCH, QUALITY & INNOVATION (RQI)
Your Company continues to focus on innovation as a driver of growth. In FY''17 innovation included the launch of the unique Microwave Popcorn Tub which offers an in home experience similar to that of a cinema hall. FY''18 will see us continuing to drive innovation both on our existing products and on brand extensions.
11. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE AND EMPLOYEE PARTICULARS
A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as annexure and forms part of this report.
12. HUMAN RESOURCES / INDUSTRIAL RELATIONS
The steady growth in the Foods business of the Company means that more jobs are being created both in Manufacturing and Sales. In FY''17 the total number of people associated with the Company either directly or indirectly increased to c 2500 persons as a consequence of continued growth in the business and resultant increase both in selling and manufacturing resources.
Your Company will continue to work to ensure that we have a highly engaged and productive organization to deliver against our vision of being amongst India''s "Best Performing, Most Respected Foods Companies".
13. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 there under in respect of the top ten employees in terms of remuneration drawn and employees who were in receipt of remuneration aggregating Rs. 1.02 crores or more or were employed for part of the year and were and in receipt of remuneration aggregating Rs.8.50 lakhs per month or more during the financial year ending 31st March, 2017 is provided in the Annexure forming part of this Report.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
15. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions, Companies Act, 2013 and Listing Regulations.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website: http://www.atfoods.com/ templates/home_tpl/pdf/other_info/policy_dealing_related_party_transactions.pdf. The related party disclosures form part of the financial statements provided in this Annual Report.
16. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on 25th July
2012 had approved "Agro Tech Employee Stock Option Plan" ("Plan"). The Plan was further modified vide special resolution in the Annual General Meeting held on 24th July 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SEBI Regulations") and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust ("Trust") under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company ("Committee"). The Plan is in compliance with the provisions of SEBI Regulations and there has been no material change in the Plan during the year. Further details of the Plan are available on the website of the Company at www.atfoods.com.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a good corporate citizen responsible for the communities where we operate, your Company is involved in a CSR activity under the umbrella of Poshan. The program which is designed to address malnourishment amongst children, works with Government Anganwadi''s and Child Malnourishment Treatment Centers using Peanut Butter which is a source of protein and highly effective to fight malnutrition. In FY''17 we increased the coverage of the program to 12,554 children up from 10,700 children in the prior year. However, spending was lower at 1% due to higher efficiencies in the process and further expansion of the program awaiting necessary governmental approvals. On receipt of approvals we will be in a position to further expand this program and work towards the 2% guideline in the Companies Act, 2013.
As per the Companies Act, 2013, all Companies having net worth of Rs.500 crore or more, or turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more during any financial year will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director.
Aligning with the guidelines, the Company has constituted a CSR Committee comprising Lt. Gen. D B Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, (Ms.Anna Biehn, Mr. Michael Walter and Mr. Javier Eduardo Alarcon Ruiz) @ (Mr. Steven Lee Harrison, Ms. Denise Lynn Dahl and Ms. Jill Rahman)* as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Company''s website:http://www.atfoods.com/ templates/home_tpl/pdf/other_info/ ATFL%20CSR%20P0LICY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.
- Mr. Michael D Walterre signed as Member on 26th April, 2016, Mr. Javier Eduardo Alarcon Ruiz resigned as Member on 15th July, 2016 and Ms. Anna Biehn resigned as Member on 30th December, 2016.
- Mr. Steven Lee Harrison has been appointed as Member on 26th April, 2016, Ms. Denise Lynn Dahl has been appointed as Member on 24th August, 2016 and Ms. Jill Rahman as Member on 18th January, 2017.
22. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Mr. Steven Lee Harrison retires by rotation and being eligible, offers himself for reappointment. A brief profile of Mr. Steven Lee Harrison is given in the notice of the 30th Annual General Meeting.
Mr. Javier Eduardo Alarcon Ruiz and Ms. Anna Biehn have resigned as Directors of the Company. The Directors place on record their appreciation of the valuable services rendered and wise counsel given by Mr. Javier Eduardo Alarcon Ruiz and Ms. Anna Biehn during their tenure of Office as Directors.
Ms. Denise Lynn Dahl was appointed as an Additional Director of the Company pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 130 of the Articles of Association of the Company.
She holds office up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Ms. Denise Lynn Dahl as Director of the Company at the Annual General Meeting.
A brief profile of Ms. Denise Lynn Dahl is given in the notice of the 30th Annual General Meeting.
All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they were neither are a promoter of the
Company or its holding, subsidiary or associate Company;
ii. They are not related to promoters or other directors in the Company, its holding, subsidiary or associate Company;
c. they do not have any pecuniary relationship with the Company, its holding, subsidiary or associate Company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
d. none of their relatives has or had pecuniary relationship or transaction with the Company, its holding, subsidiary or associate Company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;
e. neither they nor their relatives -
(i) hold or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, ofâ
(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or
(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten per cent or more of the gross turnover of such firm;
(iii) held together with any relatives two per cent or more of the total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organization that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per cent or more of the total voting power of the Company;
f. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company''s business.
None of the independent Directors will retire at the ensuring Annual General Meeting.
23. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2016-17 on the following dates:
1. 26th April, 2016
2. 27th July, 2016
3. 19th October, 2016
4. 18th January, 2017
24. AUDIT COMMITTEE
The Company''s Audit Committee presently comprises of six Directors, all except one are non-executive and Independent Directors. This is in compliance with Clause 49 of the Listing Agreement Companies Act, 2013 and the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015. Lt. Gen. D.B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr Narendra Ambwani, Mr. Arun Bewoor Mr. Javier Eduardo Alarcon Ruiz@, Ms. Denise Lynn Dahl * and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
@ Mr. Javier Eduardo Alarcon Ruiz has resigned as Director on 15th July, 2016.
*Ms. Denise Lynn Dahl was appointed as Director on 24th August, 2016.
25. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Company''s Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit after Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure to this Report.
26. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors.
The Board is evaluated on the basis of the following attributes namely, guiding strategy, nurturing leaders, aligning incentives, managing risks, enhancing the brand and enabling governance.
The remuneration / commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non- Executive / Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs.1,00,000 (Rupees one lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed as part of this Report and is also uploaded on the website of the Company, http:// HYPERLINK "http://www.atfoods.com/templates/home_tpl/pdf/"www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf
27. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Company''s strategy, operations and products.
The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the
Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. The appointment letters issued to independent directors is uploaded on the website,http://www.atfoods.com/templates/home_tpl/pdf/other_info/terms_ conditions_appointment_independent_ directors.pdf.
28. AUDITORS
M/s. B S R & Associates LLP, Chartered Accountants, were recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 27th Annual General Meeting to the conclusion of the 32nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the Auditors'' appointment has to be ratified at every Annual General Meeting. Accordingly, the appointment of M/s. B S R & Associates LLP, Chartered Accountants, as the statutory auditors of the Company, is placed for ratification by the shareholders. The Company has received a certificate from M/s. B S R & Associates, LLP to the effect that they are not disqualified from continuing to act as Auditors and would be in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2013. The Report given by the Auditors, M/s. B S R & Associates LLP., and Chartered Accountants on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
29. SECRETARIAL AUDIT
M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the financial year 2016-17. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure to this Director''s Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
30. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FY''17 the numbers of sales staff on the rolls of the Company were 386.
Your company''s wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd is expected to commence production in FY''18. This will enable the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market.
In FY''18 we will also be working towards leveraging your Company''s wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited and seek to establish a local low cost production model which will enable us to benefit from the growth of our neighboring countries.
During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2016-17 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format are annexed to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Companies is also available on the website of your Company. http://www.atfoods.com/ investor-relations/annual-reports.html.
31. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act,
2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2017 is attached as an Annexure to this Directors'' Report.
32. GENERAL
Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report.
4. The Whole-time Director & Managing Director & CEO of the Company does not receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.
6. No cases reported or filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
7. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013. In terms of provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs. 0.41 Million (as on 31st March, 2017) of unpaid /unclaimed dividends will be transferred to Investor Education and Protection Fund before 1st September, 2017.
33. APPRECIATION
The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.
On Behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
Managing Director & CEO Director
DIN 07439079 DIN 00239637
Dt: 3rd May, 2017
Mar 31, 2016
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the financial year ended 31st
March, 2016.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Company''s performance for the year ended 31st March, 2016 is as
follows:
(Rs, Millions)
2015-16 2014-15
Net Sales 7,801.94 7,562.34
Other Income 20.16 36.41
Total Income 7,822.10 7,598.75
Operating Expenses 7,252.80 6,985.89
PBDIT 569.30 612.86
Depreciation 160.12 147.58
Interest 53.28 12.29
Profit Before Tax (PBT) 355.90 452.99
Taxes 122.31 80.20
Profit After Tax (PAT) 233.59 372.79
Net Sales for the year at 7,801.94 MM were 3% higher than Prior Year
reflecting continued strong growth in the Foods business which
registered an increase in Net Sales of 8% to reach a turnover of Rs
1,713 MM. In the Edible Oils business, Net Sales increased by 2% with a
5% increase in turnover of Sundrop Oils offset by an 8% decline in the
commodity Crystal business. Depreciation increased by 8% reflecting
the absorption of a significant Capex program with Interest costs
rising due to higher imports of popcorn kernels to ensure input supply
continuity. Effective Tax rate for FY''16 at 34% was higher than
previous year (PY) of 18% reflecting the end of Section 80IC benefits
at the Kashipur facility.
1.2 Key Indicators
(Rs, Millions)
2015-16 2014-15
Gross Margin (GM) 1,826.48 1,897.64
GM % 23.4% 25.1%
Advertising & Sales Promotion 426.50 443.89
A&P % 5.5% 5.9%
Gross Margin % was lower than PY by 170 basis points reflecting 3 key
investments made by the Company to drive Growth  (a) Absorption of
higher Manufacturing Costs as a consequence of a significant Capex
program over the period FY''14 to FY''16 (b) Distributor support
investments for higher delivery costs incurred for an additional 200
Company Salesmen (c) Improvement in value proposition despite higher
corn costs for continued volume growth in the Snacks category. A&P
spend was lower by 40 basis points reflecting the choice made by the
Company to increase investments in Distribution through higher Company
Salesmen and Distributor Support mechanisms translating into an
additional 100 basis points of investment in Distribution.
2. DIVIDEND
Given the continued strong performance of the Company, your Directors
are pleased to recommend a Dividend of Rs, 2/- per equity share of the
face value of Rs, 10/- each for the period ended 31st March, 2016
subject to the approval of the share holders at the Annual General
Meeting to be held on 27th July, 2016.
(Rs, Millions)
2015-16 2014-15
Profit after Tax 233.59 372.79
Profit brought forward from 2,041.97 1,727.84
Previous year
Surplus available for 2,275.56 2,100.63
Appropriation
Transfer to General Reserve - -
Proposed Dividend for the
Financial year at the rate of
Rs, 2/- each*
(previous year Rs, 2/-) - 48.74
Tax on Proposed Dividend - 9.92
Forward to the following year 2,275.56 2,041.97
*Refer Note No. 2.46 in
notes to accounts
3. RESPONSIBILITY STATEMENT The Directors confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit and loss
of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
were operating effectively; and
(f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors'' Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certification as required by SEBI (Listing Obligations and
Disclosure Requirements) 2015.
In line with the requirements of new Companies Act, 2013, your Company
has constituted new Board Committees and has in place all the statutory
Committees required under the law. Details of Board Committees along
with their terms of reference, composition and meetings of the Board
and Board Committees held during the year, are provided in the
Corporate Governance Report.
5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from members on the Annual Report and Accounts, this
report includes MD&A as appropriate so that duplication and overlap
between the Directors'' Report and a separate MD&A is avoided and the
entire material is provided in a composite and comprehensive document.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
The Food industry continued to remain sluggish during FY''16. However,
your Company has taken significant measures to ensure continued strong
growth through a combination of investments in manufacturing capacities
and increased investments in distribution expansion.
We expect to be able to continue to deliver strong growth and take
advantage of the significant capital investments we have recently
completed behind products with clear competitive advantage and "right
to win". An improvement in the overall consumption climate will enable
us to further accelerate this growth.
7. OPPORTUNITIES AND THREATS
The Indian food industry is still at a nascent stage and we expect it
to record solid growth rates for several years to come. This represents
a significant opportunity for your Company given that we have already
made balanced capital investments to develop a portfolio capable of
delivering steady profitable growth.
The continuing digitization of today''s world presents both an
opportunity and a threat. An opportunity because it enables us to
communicate with and deliver to consumers in a far more focused manner
than was possible in the pre-digital age. However, it is also a threat
because it enables smaller competitors to reach out to consumers in a
manner not possible in the pre-digital age because of the high costs of
legacy distribution systems. We have to approach this in a nimble and
balanced manner and are confident that in doing so we will be able
capture the opportunities while overcoming the threats.
8. STATE OF THE COMPANY''S AFFAIRS
In FY''16 Act II remained the fastest growing Snacks brand in the Modern
Trade and Sundrop Peanut Butter the fastest growing Spread in the
Spreads Category, enabling us to deliver strong growth in the Foods
business of the Company.
Our strong and profitable position in both the Snacks and the Spreads
categories means that we are well placed to seize growth opportunities
in both of these categories with a portfolio which is profitable and
meets emerging consumer needs.
In the last year''s Director''s Report we had stated our intent to
increase investments in Distribution with the establishment of a strong
portfolio. In FY''16 your Company increased its investment in
Distribution Expansion by c Rs.80 MM or 100 basis points of Net Sales
which was largely funded by savings in administrative expenses. This
investment was made with a steady build up during the year translating
into an accelerated quarter on quarter growth in our Foods business in
FY''16.
Your Company will continue to leverage the investments made both in
portfolio expansion & distribution expansion to drive growth in both
the Snacks & the Spreads categories while maintaining a strong position
in the Edible Oils category.
This will enable us to progress towards our goal of being amongst
India''s "Best Performing Most Respected Foods Companies".
9. PRODUCT CATEGORIES
9.1 Snacks:
Your Company continued to gain share in the Rs,10,000 crore Snacks
category in India driven by further relevant extensions of the Act II
brand and selective extension into Indian snacks of the Sundrop brand.
Act II, which is now present in Ready to Cook Popcorn, Tortilla Chips,
Ready to Eat Popcorn and Extruded Snacks recorded a turnover of Rs,148
crore in Net Sales in FY''16. In the Modern Trade, Act II was the
fastest growing Snack in FY''16 with a value share of roughly 9% of the
Category as compared to an estimated 2% share across all channels. As
we expand our distribution and manufacturing footprint we would expect
to realize our fair share of the category nationally.
Success in the Snacks business requires both an expansion in
distribution and a national manufacturing footprint. As stated earlier
in this report we have significantly increased our investments in
Distribution in FY''16. Last year, your Company also acquired land in
both Chittoor (AP) and Kolkata (WB). Regulatory approval has already
been received for Chittoor where we are in the process of commencing
construction. In the case of Kolkatta we will await the necessary
regulatory clearances. Together with the 4 existing plants and the near
completion of plant close to Guwahati will enable us to be a profitable
and strong national Snacks player.
9.2 Spreads:
The Rs,1000 crore Spreads category was one of the fastest growing food
categories nationally in India in FY''16. With a 30% growth in Volume &
Value in FY''16, we estimate that Sundrop Peanut Butter now has roughly
3% of the category nationally and about 7% in the Modern Trade where it
is clearly the driver of category growth.
Your Company continues to make steady investments behind the Peanut
Butter business and we feel is well positioned to seize the growth
opportunities and capture our fair share of the Category. In FY''16 the
Company introduced small pack sizes to drive trial of the Category
while continuing to drive distribution. In FY''17 we will continue to
use innovation to drive the Spreads category and our share within the
Category.
9.3 Edible Oils & Sprays:
With a 76% share of total revenue, the Edible Oils category continues
to be a critical category for your Company. In FY''16 we recorded a
steady performance on Sundrop Edible Oils which recorded a volume
growth of 6% and a value growth of 5%. The commodity Crystal Oil which
is sold largely in the states of Andhra Pradesh and Telangana however
came under significant competitive pressure and recorded a decline of
14% in volume and 8% in value. Your Company continues to support our
flagship Sundrop Heart in this Category with adequate level of
investments to ensure that our position in this category remains
healthy and profitable while delivering the highest returns to our
shareholders.
9.4 Soups, Puddings & Desserts:
As stated in last year''s report your Company is in the process of
evaluating the impact of local production capabilities in this
category. This will be undertaken along with alternate options for
investment choices, a process which is currently underway.
9.5 Meals & Meal Enhancers:
As stated in last year''s report your Company is in the process of
assessing the impact of local production on this category. Similar to
9.4 (above) this will be undertaken along with alternate options for
investment choices, a process which is currently underway.
10. RESEARCH, QUALITY & INNOVATION (RQI)
Your Company continues to focus on innovation as a driver of growth. In
FY''16 innovation drove the rapid growth that we saw in both the Spreads
and the Bagged Snacks categories. This process will continue in FY''17
in addition to which we will also bring our innovation capabilities to
test new categories.
11. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE
AND EMPLOYEE PARTICULARS
A Statement giving details of conservation of energy, technology
absorption and foreign exchange earnings and outgo in accordance with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as
annexure and forms part of this report.
12. HUMAN RESOURCES / INDUSTRIAL RELATIONS
As a part of a Company wide program to reduce the cost of Purchased
Services while leveraging the digital world, we have discontinued the
use of several external measurement systems including the use of retail
audits. In the area of Human Resources we discontinued the use of
external measurement of engagement and used available internal digital
tools. Our engagement scores continue to be robust with an engagement
level of 79%.
Your Company will continue to work to ensure that we have a highly
engaged and productive organization to deliver against our vision of
being amongst India''s "Best Performing, Most Respected Foods
Companies".
13. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act,
2013 read with Rule 5(2) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 thereunder in respect of the
employees who were in receipt of remuneration aggregating Rs, 60 lakhs
or more or were employed for part of the year and were and in receipt
of remuneration aggregating Rs, 5 lakhs per month or more during the
financial year ending 31st March, 2016 is provided in the Annexure
forming part of this Report.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 form part of the notes to the financial statements
provided in this Annual Report.
15. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the
Company during the financial year with related parties were in the
ordinary course of business and on an arm''s length basis. During the
year, the Company had not entered into any contract or arrangement or
transaction with related parties which could be considered material
i.e., transactions exceeding ten percent of the annual consolidated
turnover as per the last audited financial statements, in accordance
with the policy of the Company on materiality of related party
transactions, Companies Act, 2013 and Listing Regulations.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company''s website.:http://www.atfoods.com/
templates/home_tpl/pdf/other_info/
policy_dealing_related_party_transactions.pdf
The related party disclosures form part of the financial statements
provided in this Annual Report.
16. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of
the Company held on 25th July 2012 had approved "Agro Tech Employee
Stock Option Plan" ("Plan"). The Plan was further modified vide special
resolution in the Annual General Meeting held on 24th July 2015 to
align it with the provisions of SEBI (Share Based Employee Benefits)
Regulations, 2014 ("SEBI Regulations") and other applicable provisions
for the time being in force. The Plan is administered by Agro Tech ESOP
Trust ("Trust") under the supervision of the Nomination and
Remuneration Committee of the Board of Directors of the Company
("Committee"). The Plan is in compliance with the provisions of SEBI
Regulations and there has been no material change in the Plan during
the year. Further details of the Plan are available on the website of
the Company at www.atfoods.com.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a good corporate citizen responsible for the communities where we
operate, your Company is involved in a CSR activity under the umbrella
of Poshan. The program which is designed to address malnourishment
amongst children, works with Government Anganwadi''s and Child
Malnourishment Treatment Centers using Peanut Butter which is a source
of protein and highly effective to fight malnutrition. In FY''16 we
increased the coverage of the program to 10,700 children up from 8,000
children in the prior year. However, spending was lower at 1% due to
higher efficiencies in the process and further expansion of the program
awaiting necessary governmental approvals. On receipt of the approvals,
we will be in a position to further expand this program and work
towards the 2% guideline specified in the Companies Act, 2013.
As per the Companies Act, 2013, all Companies having net worth of Rs,
500 crore or more, or turnover of Rs,1,000 crore or more or a net
profit of Rs, 5 crore or more during any financial year will be
required to constitute a CSR Committee of the Board of Directors
comprising three or more directors, at least one of whom will be an
Independent Director.
Aligning with the guidelines, the Company has constituted a CSR
Committee comprising Lt. Gen. D B Singh as Chairman, Mr. Sanjaya
Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani,
Ms. Anna Biehn, Mr. Michael Walter and Mr. Javier Eduardo Alarcon Ruiz
as its Members. The Committee is responsible for formulating and
monitoring the CSR Policy of the Company. The CSR Policy of the
Company, as approved by the Board of Directors is available on the
Company''s website:http:/ /www.atfoods.com/templates/home_tpl/pdf/
other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received
the 2014 South Asia Platinum SABRE Award for Corporate Social
Responsibility.
18. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization
framework which has been adopted by the Board at the Board Meeting held
on 1st May 2006. The Company has framed a risk management policy and
testing in accordance with the laid down policy is being carried out
periodically. The Senior Management has been having regular Meetings
for reassessing the risk environment and necessary steps are being
taken to effectively mitigate the identified risks. A Risk Management
Committee also has been constituted with a Committee of the Directors
and senior management to address issues which may threaten the
existence of the Company
19. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by
the Board of Directors on 17th October, 2014. This Whistle Blower
Policy of the Company provides opportunities to employees to access in
good faith, to the Management, concerns (in certain cases to the Audit
Committee) in case they observe unethical or improper practices (not
necessarily a violation of law) in the Company and to secure those
employees from unfair termination and unfair prejudicial employment
practices. The policy has also been uploaded on the website of the
Company:http://www.atfoods.com/templates/
home_tpl/pdf/other_info/ATFL_WB% 20 Policy % 20 final.pdf
20. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation
to drive productivity to work efficiently with our customers &
suppliers while making available to our employees robust information to
ensure best in class analysis of the business and identification of
opportunities to improve shareholder return.
21. FINANCE AND ACCOUNTS
21.1 Internal Controls
The Company has a robust system of internal controls commensurate with
the size and nature of its operations, to ensure orderly and efficient
conduct of business. These controls ensure safeguarding of assets,
prevention, and detection of fraud and error, accuracy and completeness
of accounting records, timely preparation of reliable financial
information and adherence to the company''s policies, procedures and
statutory obligations.
Your Company has established standard operating procedures for smooth
and efficient operations in addition to ensuring internal controls.
Your Company has also documented:
a comprehensive Code of Conduct for the Board Members and employees of
your Company
- An Employee Handbook
- Whistle Blower Policy defined to provide channel of communication
without fear Comprehensive framework for Risk Management, and
CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has appointed Internal Auditors to ensure adequacy of
internal control systems and make recommendations thereto. Audit
reports are circulated to management, which takes prompt action as
necessary.
The Audit Committee of the Board meets periodically to review the
performance as reported by Auditors. The Internal and External
Auditors also attend the meetings and convey their views on the
adequacy of internal control systems as well as financial disclosures.
The Audit Committee also issues directives and/or recommendations for
enhancement in scope and coverage of specific areas, wherever felt
necessary.
21.2. Cautionary Statement
Statements in this Directors'' Report and Management Discussion and
Analysis describing the company''s objectives, projections, estimates
and expectations may constitute "forward looking statements" within the
meaning of applicable laws and regulations. Actual results may differ
materially from those either expressed or implied.
21.3 Outlook
We believe that your Company now has the combination of a strong
product portfolio and a proven business model for distribution
expansion leveraging this broader portfolio. We will continue to invest
in a balanced manner behind both our brands and expansion of
distribution to achieve steady profitable growth.
22. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of
Association of the Company, in so far as it is not inconsistent with
the relevant provisions of the Companies Act, 2013, Ms. Anna Elizabeth
Biehn retires by rotation and being eligible, offers herself for re-
appointment. A brief profile of Ms. Anna Biehn is given in the notice
of the 29th Annual General Meeting.
Mr. Michael Walter has tendered his resignation as a Director of the
Company. The Directors place on record their appreciation of the
valuable services rendered and wise counsel given by Mr. Michael Walter
during his tenure of office as Director.
Dr. Pradip Ghosh Chaudhuri, the Whole-time Director retires from the
Company with effect from 30th June, 2016. Mr. Sachin Gopal has been
appointed as the Additional and Managing Director with effect from 1st
July, 2016 subject to approval of the shareholders and Central
Government as may be applicable.
Mr. Steven Harrison is being appointed as an Additional Director of the
Company pursuant to the provisions of Section 161(1) of the Companies
Act, 2013 and Article 130 of the Articles of Association of the
Company.
They hold office up to the date of the ensuing Annual General Meeting.
Notice together with the deposit, as required under Section 160 of the
Companies Act, 2013 has been received from a Member proposing the
appointment of Mr. Steven Harrison and Mr. Sachin Gopal as Directors of
the Company at the Annual General Meeting.
A brief profile of the above Directors is given in the notice of the
29th Annual General Meeting.
All the Independent Directors of the Company have also given a
confirmation to the Company as provided under Section 149(6) of the
Companies Act, 2013 that:
a. they are persons of integrity and possess relevant expertise and
experience;
b. i. they were neither are a promoter of the
Company or its holding, subsidiary or associate Company;
ii. they are not related to promoters or other Directors in the
Company, its holding, subsidiary or associate Company;
c. they do not have any pecuniary relationship with the Company, its
holding, subsidiary or associate Company, or their promoters, or
directors, during the two immediately preceding financial years or
during the current financial year;
d. none of their relatives has or had pecuniary relationship or
transaction with the Company, its holding, subsidiary or associate
Company, or their promoters, or directors, amounting to two per cent or
more of its gross turnover or total income or fifty lakh rupees or such
higher amount as may be prescribed, whichever is lower, during the two
immediately preceding financial years or during the current financial
year;
e. neither they nor their relatives Â
(i) hold or has held the position of a key managerial personnel or is
or has been employee of the Company or its holding, subsidiary or
associate Company in any of the three financial years immediately
preceding the financial year in which they were proposed to be
appointed;
(ii) is or has been an employee or proprietor or a partner, in any of
the three financial years immediately preceding the financial year in
which they were proposed to be appointed, ofÂ
(A) a firm of auditors or company secretaries in practice or cost
auditors of the Company or its holding, subsidiary or associate
Company; or
(B) any legal or a consulting firm that has or had any transaction with
the Company, its holding, subsidiary or associate Company amounting to
ten per cent or more of the gross turnover of such firm;
(iii) held together with any relatives two per cent or more of the
total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any
non-profit organisation that receives twenty-five per cent or more of
its receipts from the Company, any of its promoters, directors or its
holding, subsidiary or associate Company or that holds two per
cent or more of the total voting power of the Company;
f. they possess appropriate skills, experience and knowledge in one or
more fields of finance, law, management, sales, marketing,
administration, research, corporate governance, technical operations or
other disciplines related to the company''s business.
None of the independent Directors will retire at the ensuring Annual
General Meeting.
23. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in
the year 2015-16 on the following dates:
1. 17th April, 2015
2. 24th July, 2015
3. 16th October, 2015
4. 21st January, 2016
24. AUDIT COMMITTEE
The Company''s Audit Committee presently comprises of six Directors, all
except one are non- executive and Independent Directors. This is in
compliance with Clause 49 of the Listing Agreement. Lt. Gen. D.B.
Singh, an Independent Director, is the Chairman of the Committee while
Mr. Sanjaya Kulkarni, Mr Narendra Ambwani, Mr. Arun Bewoor Mr. Javier
Eduardo Alarcon Ruiz and Ms. Veena Gidwani are its Members. The Charter
of the Committee is in line with the requirements of Section 177 of the
Companies Act, 2013 and the relevant clauses of the Listing Agreement.
25. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND
OTHER EMPLOYEES
The performance of the Company''s Key Managerial Personnel, Whole time
Director and Employees is measured on the progress being made on the
strategic vision of the Company and Profitability. Progress against
the strategic vision of the Company is measured by continued
improvement in Gross Margin and share of the Foods business in the
total Net Sales of the Company. Profitability is measured using Profit
After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is being provided as
an Annexure to this Report.
26. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the
requirements of the Companies Act, 2013. The performance evaluation of
Independent Directors is done by the entire Board of Directors
(excluding the director being evaluated). On the basis of the report of
performance evaluation, it shall be determined whether to extend or
continue the term of appointment of the Independent Directors.
The Board is evaluated on the basis of the following attributes namely,
guiding strategy, nurturing leaders, aligning incentives, managing
risks, enhancing the brand and enabling governance.
The remuneration / commission to Non-Executive and Independent
Directors shall be fixed as per the provisions contained under
Companies Act, 2013. The Non- Executive / Independent Directors may
receive remuneration by way of fees for attending each meeting of Board
or Committee thereof. Provided that the amount of such fees shall not
exceed Rs, 1,00,000 (Rupees one lakh only) per meeting of the Board or
Committee or such amount as may be prescribed by the Central Government
from time to time.
For Independent Women Directors, the sitting fee paid is not less than
the sitting fee payable to other Directors.
Commission may be paid within the monetary ceiling limit approved by
shareholders, subject to the limit not exceeding 1% of the profits of
the Company computed as per the applicable provisions of the Act.
An Independent Director shall not be entitled to any stock options of
the Company.
Copy of the Nomination and Remuneration policy is annexed as part of
this Report and is also uploaded on the website of the Company, http://
www.atfoods.com/templates/home_tpl/pdf/
other_info/Nomination%20and%20Remuneration %20Policy.pdf
27. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To
familiarize the new inductees with the strategy, operations, business
and functions of your Company, the Senior Management make presentations
to the inductees about the company''s strategy, operations and products.
The Company also encourages and supports its Directors to update
themselves with the rapidly changing regulatory environment. Also, at
the time of appointment of independent directors, the Company issues a
formal letter of appointment describing their roles, functions, duties
and responsibilities as a Director. The appointment letters issued to
independent directors is uploaded on the website,
http://www.atfoods.com/templates/
home_tpl/pdf/other_info/terms_conditions_ appointment_independent_
directors.pdf.
28. AUDITORS
M/s. B S R & Associates LLP, Chartered Accountants, were recommended
for appointment as the Statutory Auditors of the Company to hold office
from the conclusion of the 27th Annual General Meeting to the
conclusion of the 32nd Annual General Meeting. In terms of the first
proviso to Section 139 of the Companies Act, 2013, the Auditors''
appointment has to be ratified at every Annual General Meeting.
Accordingly, the appointment of M/s. B S R & Associates LLP, Chartered
Accountants, Firm''s Registration Number:116231W/W-100024 as the
statutory auditors of the Company, is placed for ratification by the
shareholders. The Company has received a certificate from M/s. B S R &
Associates, LLP to the effect that they are not disqualified from
continuing to act as Auditors and would be in accordance with the
provisions of Section 139 and 141 of the Companies Act, 2013 and
Companies (Audit and Audit Rules), 2014. The Report given by the
Auditors, M/s. B S R & Associates LLP., Chartered Accountants on the
financial statements of the Company is part of the Annual Report. There
has been no qualification, reservation or adverse remark or disclaimer
in their Report. During the year under review, the Auditors had not
reported any matter under Section 143(12) of the Companies Act, 2013
and hence, no detail is required to be disclosed under Section
134(3)(ca) of the Companies Act, 2013.
29. SECRETARIAL AUDIT
M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct
the Secretarial Audit of the Company as required under the provisions
of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 for
the financial year 2015-16. Copy of the Secretarial Audit Report in
Form MR-3 is given as an Annexure to this Director''s Report. The
Secretarial Audit Report does not contain any qualification or adverse
remarks.
30. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to
perform the role of aiding the expansion of distribution and display of
your products. At the end of FY''16 the number of sales staff on the
rolls of the Company were 299.
In FY''16 your Company commenced the work of installation of equipment
for the plant near Dhaka, Bangladesh, through its wholly owned
subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd. We are currently in
the process of seeking regulatory clearances post which we will be in a
position to start work on the supply chain and then commence
production. This will enable the Company to build scale in Bangladesh
and benefit from the economic growth of a neighboring emerging market.
In FY''15 your Company also started work on leveraging the wholly-owned
subsidiary - Sundrop Foods Lanka (Private) Limited established on 27th
January, 2015. Limited equipment for the subsidiary has already been
shipped from India and in FY''17 we will be working on establishing a
local cost local production model which will enable us to benefit from
the growth of our neighboring countries and establish our brands where
we currently have our presence through export.
During the year, the Board of Directors reviewed the affairs of the
subsidiary Companies. The Company has published the audited
consolidated financial statements for the financial year 2015-16 and
the same forms part of this Annual Report. This Annual Report does not
contain the financial statements of our subsidiaries. The statements
highlighting the summary of the financial performance of the
subsidiaries in the prescribed format is annexed to this Report. The
audited financial statements and related information of subsidiaries
are available for inspection during business hours at our registered
office and will be provided to any shareholder on demand. The separate
audited financial statements in respect of each subsidiary companies is
also available on the website of your Company. http://www.atfoods.com/
investor-relations/annual-reports.html
31. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section
92(3) of the Companies Act, 2013 and Rule 12 of the Companies
(Management & Administration) Rules, 2014 prepared as on 31st March,
2016 is attached as an Annexure to this Directors'' Report.
32. GENERAL
Your Directors state that no disclosures or reporting are being made in
respect of the following items as there were no applicable transactions
or events on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except under the ESOP scheme referred
to in this Report.
4. The Whole-time Director of the Company does not receive any
remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and company''s
operations in future.
6. No cases reported or filed pursuant to the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
7. During the year, your Company has not accepted any public deposits
under Chapter V of Companies Act, 2013. In terms of the provisions of
Investor Education and Protection Fund (Awareness and Protection of
Investors) Rules, 2001, Rs. 0.32 Million (as on 30th April, 2016) of
unpaid / unclaimed dividends will be transferred to Investor Education
and Protection Fund before 30th July, 2016.
33. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers and all
other stakeholders towards performance of the Company during the year
under review.
On Behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
DIN 00239637
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
DIN 02650577
Dt: 26th April, 2016.
Mar 31, 2015
Dear Members,
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the financial year ended 31st
March, 2015.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Company''s performance for the year ended 31st March, 2015 is as
follows:
(Rs Millions)
2014-15 2013-14
Net Sales 7,562.34 7,622.05
Other Income 36.41 27.05
Total Income 7,598.75 7,649.10
Operating Expenses 6,985.89 6,945.51
PBDIT 612.86 703.59
Depreciation 147.58 107.74
Interest 12.29 20.39
Profit Before Tax (PBT) 452.99 575.46
Taxes 80.20 144.63
Profit After Tax (PAT) 372.79 430.83
Net Sales for the year at Rs 7,562.34 MM were lower than Prior Year of Rs.
7,622.05 MM reflecting primarily the impact of a lower price table in
the Edible Oils segment, offset in part by a continued strong growth in
the Foods business. The Company was able to mitigate to a significant
extent the impact on PAT of
(a) 2 new factories and (b) higher A&P spends through an improvement in
effective tax rate as a consequence of Section 80 IC benefits of the
Kashipur plant and the R&D centre at Kothur, resulting in a PAT of Rs.
372.79 MM vs PY of Rs. 430.83 MM.
1.2 Key Indicators
(Rs Millions)
2014-15 2013-14
Gross Margin (GM) 1,897.64 1,858.25
GM % 25.1% 24.4%
Advertising & Sales 443.89 314.84
Promotion
A&P % 5.9% 4.1%
Gross Margin % improved by 70 basis points reflecting the continued
focus of the Company on improving Gross Margin on a steady and
sustained basis. The higher A&P spend enabled the Company to invest
increased media resources behind current products of Sundrop Heart &
Act II and as well commence support behind Sundrop Peanut Butter.
2. DIVIDEND
Given the continued strong performance of the Company, your Directors
are pleased to recommend a Dividend of Rs. 2/- per equity share of the
face value of Rs.10/- each for the period ended 31st March, 2015 subject
to the approval of the share holders at the Annual General Meeting to
be held on 241h July, 2015.
(Rs Millions)
2014-15 2013-14
Profit after Tax 372.79 430.83
Profit brought forward from 1,727.84 1,386.34
Previous year
Surplus available for 2,100.63 1,817.17
Appropriation
Transfer to General Reserve - 32.31
Proposed Dividend for the Financial
year at the rate of Rs 2 /- each
(previous year Rs 2/-) 48.74 48.74
Tax on Proposed Dividend 9.92 8.28
Forward to the following
year 2,041.97 1,727.84
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit and loss
of the company for that period;
(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by
the company and that such internal financial controls are adequate and
were operating effectively; and
(f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors'' Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certification as required by Clause 49 of the Listing
Agreement.
In line with the requirements of new Companies Act, 2013, your Company
has constituted new Board Committees and has in place all the statutory
Committees required under the law. Details of Board Committees along
with their terms of reference, composition and meetings of the Board
and Board Committees held during the year, are provided in the
Corporate Governance Report.
12. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act,
2013 read with Rule 5(2) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 thereunder in respect of the
employees who were in receipt of remuneration aggregating Rs. 60 lakhs or
more or were employed for part of the year and were and in receipt
of remuneration aggregating Rs. 5 lakhs per month or more during the
financial year ending 31st March, 2015 is provided in the Annexure
forming part of this Report.
13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 form part of the notes to the financial statements
provided in this Annual Report.
14. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the
Company during the financial year with related parties were in the
ordinary course of business and on an arm''s length basis. During the
year, the Company had not entered into any contract or arrangement or
transaction with related parties which could be considered material in
accordance with the policy of the Company on materiality of related
party transactions.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company''s website : http://www.atfoods.com/
templates/home_tpl/pdf/other_info/
policy_dealing_related_party_transactions.pdf The related party
disclosures form part of the financial statements provided in this
Annual Report.
15. EMPLOYEE STOCK OPTION PLAN
Details of the shares issued under the Agro Tech Employee Stock Option
Plan, as also the disclosures in compliance with the Securities and
Exchange Board of India (Share Based Employee Benefit) Regulations,
2014 are set out in the Annexure to this Report.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As a good Corporate Citizen responsible for the Communities where we
operate, your Company is involved in a CSR activity under the umbrella
of Poshan. The program which is designed to address malnourishment
amongst children, works with Government Anganwadi''s and Child
Malnourishment Treatment Centers using Peanut Butter which is a source
of protein and highly effective to fight malnutrition. In FY''15 we
increased the coverage of the program to 8,000 children up from 5,000
children in the prior year. In FY''15 we spent 1.3 % of our Net Profit
behind CSR and in line with the guidelines of the new Companies Act
this will be steadily increased to achieve the 2% goal specified in the
new Companies Act, 2013.
As per the Companies Act, 2013, all Companies having net worth of Rs. 500
crore or more, or turnover of Rs.1,000 crore or more or a net profit of Rs.
5 crore or more during any financial year will be required to
constitute a CSR Committee of the Board of Directors comprising three
or more directors, at least one of whom will be an Independent
Director.
Aligning with the guidelines, the Company has constituted a CSR
Committee comprising Lt. Gen. D B Singh as Chairman, and Mr. Sanjaya
Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani,
Ms. Anna Biehn, Mr. Michael Walter and Mr. Javier Eduardo Alarcon Ruiz
as its Members. The Committee is responsible for formulating and
monitoring the CSR Policy of the Company. The CSR Policy of the
Company, as approved by the Board of Directors is available on the
Company''s website : http://www.atfoods.com/templates/home_tpl/pdf/
other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received
the 2014 South Asia Platinum SABRE Award for Corporate Social
Responsibility.
17. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization
framework which has been adopted by the Board at the Board Meeting held
on 1st May 2006. The Company has framed a risk management policy and
testing in accordance with the laid down policy is being carried out
periodically. The Senior Management has been having regular Meetings
for reassessing the risk environment and necessary steps are being
taken to effectively mitigate the identified risks. A Risk Management
Committee also has been constituted with a Committee of the Directors
and senior management to address issues which may threaten the
existence of the company
18. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by
the Board of Directors on 17th October, 2014. This Whistle Blower
Policy of the Company provides opportunities to employees to access in
good faith, to the Management, concerns (in certain cases to the Audit
Committee) in case they observe unethical or improper practices (not
necessarily a violation of law) in the Company and to secure those
employees from unfair termination and unfair prejudicial employment
practices. The policy has also been uploaded on the website of the
Company : http://www.atfoods.com/templates/
home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.pdf
19. INFORMATION SYSTEMS
Your Company continued to focus on the use of technology and automation
to drive productivity. In FY''15 we continued to see progress in our
automation with customers including the use of EDI with Modern Trade
Customers and Distributor Automation for the
Traditional Trade.
20. FINANCE AND ACCOUNTS
20.1 Internal Controls
The Company has a robust system of internal controls commensurate with
the size and nature of its operations, to ensure orderly and efficient
conduct of business. These controls ensure safeguarding of assets,
prevention, and detection of fraud and error, accuracy and completeness
of accounting records, timely preparation of reliable financial
information and adherence to the Company''s policies, procedures, and
statutory obligations.
Your Company has established standard operating procedures for smooth
and efficient operations in addition to ensuring internal controls.
Your Company has also documented:
- a comprehensive Code of Conduct for the Board Members and employees
of your Company
- An Employee Handbook
- Whistle Blower Policy defined to provide channel of communication
without fear
- Comprehensive framework for Risk Management, and
- CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has reappointed Deloitte Haskins & Sells as its Internal
Auditor to ensure adequacy of internal control systems and make
recommendations thereto. Audit reports are circulated to management,
which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the
performance as reported by Auditors. The Internal and External
Auditors also attend the meetings and convey their views on the
adequacy of internal control systems as well as financial disclosures.
The Audit Committee also issues directives and/or recommendations for
enhancement in scope and coverage of specific areas, wherever felt
necessary.
20.2. Cautionary Statement
Statements in this Directors'' Report and Management Discussion and
Analysis describing the Company''s objectives, projections, estimates,
and expectations may constitute "forward looking statements" within the
meaning of applicable laws and regulations. Actual results may differ
materially from those either expressed or implied.
20.3 Outlook
Having completed significant capexes including 2 Greenfield locations
and local capacities for 3 new
Categories (Peanut Butter, Extruded Snacks and Tortilla Chips) the
Company is in an extremely strong position to capitalize on the
positive momentum in the overall economy and the consequent expected
upturn in consumer sentiment. Your Company will now be stepping up its
investment in Distribution Expansion to fully leverage the capacities
that have been created.
21. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of
Association of the Company, in so far as it is not inconsistent with
the relevant provisions of the Companies Act, 2013, Mr. Javier Eduardo
Alarcon Ruiz retires by rotation and being eligible, offers himself for
re-appointment. A brief profile of Mr. Javier is given in the notice of
the 281h Annual General Meeting.
Ms. Anna Elizabeth Biehn was appointed in the casual vacancy caused by
the resignation of Mr. William Lyon Hutton pursuant to the provisions
of Section 152(5) of the Companies Act, 2013 and Article 129 of the
Articles of Association of the Company.
She holds office up to the date of the ensuing Annual General Meeting.
Notice together with the deposit, as required under Section 160 of the
Companies Act, 2013 has been received from a Member proposing the
appointment of Ms. Anna Biehn as a Director of the Company at the
Annual General Meeting.
A brief profile of all the above Directors is given in the notice of
the 28th Annual General Meeting.All the Independent Directors of the
Company have also given a confirmation to the Company as provided under
Section 149(6) of the Companies Act, 2013 that:
a. they are persons of integrity and possess relevant expertise and
experience;
b. i. they were neither nor are a promoter of the company or its
holding, subsidiary or associate company;
ii. they are not related to promoters or other directors in the
company, its holding, subsidiary or associate company;
c. they do not have any pecuniary relationship with the company, its
holding, subsidiary or associate company, or their promoters, or
directors, during the two immediately preceding financial years or
during the current financial year;
d. none of their relatives has or had pecuniary relationship or
transaction with the company, its holding, subsidiary or associate
company, or their promoters, or directors, amounting to two percent or
more of its gross turnover or total income or fifty lakh rupees or such
higher amount as may be prescribed, whichever is lower, during the two
immediately preceding financial years or during the current financial
year;
e. neither they nor their relatives -
(i) hold or has held the position of a key managerial personnel or is
or has been employee of the company or its holding, subsidiary or
associate company in any of the three financial years immediately
preceding the financial year in which they were proposed to be
appointed;
(ii) is or has been an employee or proprietor or a partner, in any of
the three financial years immediately preceding the financial year in
which they were proposed to be appointed, ofÂ
(A) a firm of auditors or company secretaries in practice or cost
auditors of the company or its holding, subsidiary or associate
company; or
(B) any legal or a consulting firm that has or had any transaction with
the company, its holding, subsidiary or associate company amounting to
ten percent or more of the gross turnover of such firm;
(iii) held together with any relatives two percent or more of the total
voting power of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any
non-profit organisation that receives twenty-five percent or more of
its receipts from the company, any of its promoters, directors or its
holding, subsidiary or associate company or that holds two per cent or
more of the total voting power of the company;
f. they possess appropriate skills, experience and knowledge in one or
more fields of finance, law, management, sales, marketing,
administration, research, corporate governance, technical operations or
other disciplines related to the Company''s business.
None of the independent Directors will retire at the ensuring Annual
General Meeting.
22. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in
the year 2014-15 on the following dates:
1. 22nd April, 2014
2. 17th July, 2014
3. 17th October, 2014
4. 22nd January, 2015
23. AUDIT COMMITTEE
The Company''s Audit Committee presently comprises of six Directors, all
except one are non-executive and Independent Directors. This is in
compliance with
Clause 49 of the Listing Agreement. Lt. Gen. D.B. Singh, an Independent
Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni,
Mr Narendra Ambwani, Mr. Arun Bewoor Mr. Javier Eduardo Alarcon Ruiz
and Ms. Veena Gidwani are its Members. The Charter of the Committee is
in line with the requirements of Section 177 of the Companies Act, 2013
and the relevant clauses of the listing Agreement.
24. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND
OTHER EMPLOYEES
The performance of the Company''s Key Managerial Personnel, Whole time
Director and Employees is measured on the progress being made on the
strategic vision of the Company and Profitability. Progress against
the strategic vision of the Company is measured by continued
improvement in Gross Margin and share of the Foods business in the
total Net Sales of the Company. Profitability is measured using Profit
After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is being provided as
an Annexure to this Report.
25. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the
requirements of the Companies Act, 2013. The performance evaluation of
independent directors is done by the entire Board of Directors
(excluding the director being evaluated). On the basis of the report of
performance evaluation, it shall be determined whether to extend or
continue the term of appointment of the independent directors.
The Board is evaluated on the basis of the following attributes namely,
guiding strategy, nurturing leaders, aligning incentives, managing
risks, enhancing the brand and enabling governance.
The remuneration / commission to Non-Executive and Independent
Directors shall be fixed as per the provisions contained under
Companies Act, 2013. The Non- Executive / Independent Director may
receive remuneration by way of fees for attending each meeting of Board
or Committee thereof. Provided that the amount of such fees shall not
exceed Rs. 1,00,000 (Rupees one lakh only) per meeting of the Board or
Committee or such amount as may be prescribed by the Central Government
from time to time.
For Independent Women Directors, the sitting fee paid is not less than
the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by
shareholders, subject to the limit not exceeding 1% of the profits of
the Company
computed as per the applicable provisions of the Act. An Independent
Director shall not be entitled to any stock option of the Company.
Copy of the Nomination and Remuneration policy is annexed as part of
this Report and is also uploaded on the website of the Company :
http:// www.atfoods.com/templates/home_tpl/pdf/
other_info/Nomination%20and%20Remuneration %20Policy.pdf
26. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To
familiarize the new inductees with the strategy, operations, business
and functions of your Company, the Senior Management make presentations
to the inductees about the Company''s strategy, operations and products.
The Company also encourages and supports its Directors to update
themselves with the rapidly changing regulatory environment. Also, at
the time of appointment of independent directors, the Company issues a
formal letter of appointment describing their roles, functions, duties
and responsibilities as a Director. The appointment letters issued to
independent directors is uploaded on the website :
http://www.atfoods.com/templates/
home_tpl/pdf/other_info/terms_conditions_ appointment_independent_
directors.pdf.
27. AUDITORS
M/s. B S R & Associates LLP, Chartered Accountants, were recommended
for appointment as the Statutory Auditors of the Company to hold office
from the conclusion of the 27th Annual General Meeting to the
conclusion of the 32nd Annual General Meeting. In terms of the first
proviso to Section 139 of the Companies Act, 2013, the Auditors''
appointment has to be ratified at every Annual General Meeting.
Accordingly, the appointment of M/s. B S R & Associates LLP, Chartered
Accountants, as the statutory auditors of the Company, is placed for
ratification by the shareholders. The Company has received a
certificate from M/s. B S R & Associates, LLP to the effect that they
are not disqualified from continuing to act as Auditors and would be in
accordance with the provisions of Section 139 and 141 of the Companies
Act, 2013 and Companies (Audit and Audit Rules), 2014.
28. SECRETARIAL AUDIT
M/s. Tumuluru & Co, Company Secretaries, have been appointed to conduct
the Secretarial Audit of the Company as required under the provisions
of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 for
the financial year 2014-15. Copy of the Secretarial Audit Report in
Form MR-3 is given as an Annexure to this Director''s Report. The
Secretarial Audit Report does not contain any qualification or adverse
remarks.
29. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to
perform the role of aiding the expansion of distribution and display of
your products. At the end of FY''15 the number of sales staff on the
rolls of the company were 178.
In FY''15 your Company completed the civil work for the plant near
Dhaka, Bangladesh, through its wholly owned subsidiary Agro Tech Foods
(Bangladesh) Pvt. Ltd. The necessary equipment for commencing local
production has been shipped and we expect to commence local production
in FY''16 and will enable the Company to build scale in Bangladesh and
benefit from the economic growth of a neighboring emerging market.
In FY''15 your Company has also set up a wholly-owned subsidiary -
Sundrop Foods Lanka (Private) Limited on 27th January, 2015. This
establishment of this subsidiary will enable your Company to benefit
from the growth of our neighboring countries and establish our brands
where we currently have our presence through export.
During the year, the Board of Directors reviewed the affairs of the
subsidiary Companies. The Company has published the audited
consolidated financial statements for the financial year 2014-15 and
the same forms part of this Annual Report. This Annual Report does not
contain the financial statements of your subsidiaries. The statements
highlighting the summary of the financial performance of the
subsidiaries in the prescribed format is annexed to this Report. The
audited financial statements and related information of subsidiaries
are available for inspection during business hours at our registered
office and will be provided to any shareholder on demand. http://
www.atfoods.com/templates/home_tpl/pdf/ other_info/policy_determining_
material_ subsidiary.pdf
30. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section
92(3) of the Companies Act, 2013 and Rule 12 of the Companies
(Management & Administration) Rules, 2014 prepared as on 31st March,
2015 is attached as an Annexure to this Directors'' Report.
31. GENERAL
Your Directors state that no disclosures or reporting are being made in
respect of the following items as there were no applicable transactions
or events on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except under the ESOP scheme referred
to in this Report.
4. The Whole-time Director of the Company does not receive any
remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
6. No cases reported or filed pursuant to the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
32. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers and all
other stakeholders towards performance of the Company during the year
under review.
On Behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
DIN 00239637
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
Dt: 17th April, 2015. DIN 02650577
Mar 31, 2014
Dear Members,
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the financial year ended 31st March,
2014.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Company''s performance for the year ended 31st March, 2014 is as
follows:
2013-14 2012-13
Net Sales 7,622.05 7,871.60
Other Income 27.05 46.37
Total Income 7,649.10 7,917.97
Operating Expenses 6,945.51 7,246.50
PBDIT 703.59 671.47
Depreciation 107.74 66.74
Interest 20.39 0.30
Profit Before Tax (PBT) 575.46 604.43
Taxes 144.63 188.01
Profit After Tax (PAT) 430.83 416.42
Net Sales for the year at Rs. 7,622.05 MM were lower than Prior Year of Rs.
7,871.60 MM refecting the impact of volatility and competitive activity
in the Edible Oils segment offset in part by continued growth in the
Snacks business. Lower A&P spends than Prior Year and improvement in
effective tax rate enabled a 3.5% increase in Profit After Tax from Rs.
416.42 MM to Rs. 430.83 MM.
1.2 Key Indicators
(Rs. Millions)
2013-14 2012-13
Gross Margin (GM) 1,858.25 1,916.48
GM % 24.4% 24.3%
Advertising & Sales
314.84 451.23
Promotion
A&P % 4.1% 5.7%
Gross Margin % improved marginally by 10 basis points on a lower Net
Sales base. A lower A&P spend and a lower effective tax rate due to the
benefits on account of the Kashipur facility (Section 80 IC) and the R&D
center at Hyderabad, enabled the Company to deliver an improved Profit
After Tax from 5.3% of Sales to 5.7% of Sales an improvement of 40
basis points, refecting your Company''s commitment to delivering
sustained and Profitable growth.
2. DIVIDEND
Given the continued strong performance of the Company, your Directors
are pleased to recommend a Dividend of Rs. 2.00/- per equity share of the
face value of Rs. 10/- each for the period ended 31st March, 2014 subject
to the approval of the share holders at the Annual General Meeting to
be held on 17th July, 2014.
(Rs. Millions)
2013-14 2012-13
Profit After Tax 430.83 416.42
Profit brought forward from 1,386.34 1,058.17
Previous year
Surplus available for 1,817.17 1,474.59
Appropriation
Transfer to General Reserve 32.31 31.23
Proposed Dividend for the
Financial year at the rate of
Rs. 2 each (previous year: Rs. 2) 48.74 48.74
Tax on Proposed Dividend 8.28 8.28
Forward to the following
1,727.84 1,386.34
year
3. RESPONSIBILITY STATEMENT
The Directors confrm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same;
ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the Profit or loss of
the Company for that period;
iii) they have taken proper and sufficient care for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv) they have prepared the annual accounts on a going concern basis.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors'' Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certifcation as required by Clause 49 of the Listing
Agreement.
15.3 Outlook
The commencement of local production of Peanut Butter, development of a
range of Ready to Eat Sweet Popcorn and capacities for Extruded Snacks
means that your Company now has a Significantly wider product portfolio
to support our growth ambitions. Sundrop Heart, Act II Popcorn and
Sundrop Peanut Butter will continue to be our focus areas for marketing
investments which will be supported by other existing and new products
to gain scale in Manufacturing, Supply Chain & Distribution.
16. DIRECTORS
In accordance with the provisions of Article 143 of the Articles of
Association of the Company, in so far as it is not inconsistent with
the relevant provisions of the Companies Act, 2013, Mr. Michael D
Walter retires by rotation and being eligible, offers himself for re-
appointment. A brief profle of Mr. Michael Walter is given in the
notice of the 27th Annual General Meeting.
Mr. Javier Eduardo Alarcon Ruiz was appointed in the casual vacancy
caused by the resignation of Mr. Patrick Douglas Linehan pursuant to
the provisions of Section 262 of the Companies Act, 1956 and Article
129 of the Articles of Association of the Company.
He holds offce up to the date of the ensuing Annual General Meeting.
Notice together with the deposit, as required under Section 160 of the
Companies Act, 2013 has been received from a Member proposing the
appointment of Mr. Javier Eduardo Alarcon Ruiz as a Director of the
Company at the Annual General Meeting.
The Companies Act, 2013 provides for appointment of Independent
Directors. Section 149(10) and (11) of the Act provides that
Independent Directors shall hold offce for a term of up to fve
consecutive years on the Board of a Company and that no Independent
Director shall be eligible for more than two consecutive terms of fve
years. The Act also specifes that the provisions of retirement by
rotation as defined under Section 152 (6) and (7) shall not apply to
such Independent Directors.
SEBI Circular No. CIR/CFD/POLICY CELL/2/2014 dated 17th April, 2014
also specifes that a person who has already served as an Independent
Director for fve years or more in a Company as on October 1, 2014 shall
be eligible for appointment, on completion of his present term, for one
more term of up to fve years only.
On 22nd April, 2014, the Nomination and Remuneration Committee
recommended the appointment of Lt. Gen. D B Singh, Mr. Sanjaya
Kulkarni, Mr. Narendra Ambwani and Mr. Arun Bewoor, all the existing
Independent Directors for one more consecutive term of 5 years not
liable to retire by rotation.
A brief profle of all the above Directors is given in the notice of the
27th Annual General Meeting.
17. AUDITORS
M/s. B S R & Associates LLP, Chartered Accountants, are recommended for
appointment as the Statutory Auditors of the Company to hold offce from
the conclusion of the 27th Annual General Meeting to the conclusion of
the 32nd Annual General Meeting, in place of M/s. B S R and Co.,
retiring auditors who did not wish to be reappointed. The Company has
received a certifcate from M/s. B S R & Affliates LLP to the effect
that their appointment, if made, would be within the limits prescribed
under Section 139 of the Companies Act, 2013 and Companies (Audit and
Audit Rules), 2014.
18. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to
perform the role of aiding the expansion of distribution and display of
your products. At the end of FY''14 the number of sales staff on the
rolls of the company were 115.
In FY''14 your Company also made considerable progress in setting up a
plant near Dhaka in Bangladesh through its wholly owned subsidiary Agro
Tech Foods (Bangladesh) Pvt. Ltd. The plant is expected to be
operational in FY''15 and will enable the Company to build scale in
Bangladesh and benefit from the economic growth of a neighboring
emerging market.
During the year, the Board of Directors reviewed the affairs of the
subsidiary Companies. As per Section 212 of the Companies Act, 1956, we
were required to attach the Balance Sheet, Statement of Profit and Loss
and other documents of our subsidiaries. The Ministry of Corporate
Affairs, Government of India vide its Circular No. 2/2011 dated 8th
February, 2011, exempted Companies from complying with Section 212,
provided such Companies publish the audited consolidated financial
statements in the Annual Report. The Company has published the audited
consolidated financial statements for the financial year 2013-14 and the
same forms part of this Annual Report. Therefore, this Annual Report
does not contain the financial statements of our subsidiaries. The
statement pursuant to Section 212 of the Companies Act, 1956,
highlighting the summary of the financial performance of the
subsidiaries is annexed to this Report. The audited financial statements
and related information of subsidiaries are available for inspection
during business hours at our registered offce and will be provided to
any shareholder on demand.
19. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers and all
other stakeholders towards performance of the Company during the year
under review.
On behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
Date: 22nd April, 2014
Mar 31, 2012
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the financial year ended 31st
March, 2012.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Company's performance for the year ended 31st March, 2012 is as
follows:
(Rs. Millions)
2011-12 2010-11
Net Sales 7,021.40 7,186.87
Other Income 48.66 69.47
Total Income 7,070.06 7,256.34
Operating Expenses 6,506.61 6,912.48
PBDIT 563.45 343.86
Depreciation 56.87 46.04
Interest 0.65 1.34
Exceptional Item à 174.46
Profit Before Tax (PBT) 505.93 470.94
Taxes 144.50 153.18
Profit After Tax (PAT) 361.43 317.76
Excluding the divested business of Rath, (Net Sales of Rs1,067.45 MM in
PY) Net Sales for the year at Rs 7,021.40 MM are higher than Prior Year
by 15%. Steady improvement in profitability continued with Profit
before Tax crossing the Rs 500 MM mark for the first time in the history
of the Company and Profit after Tax up by 14% over Prior Year at Rs
361.43 MM.
1.2 Key Indicators
(Rs Millions)
2011-12 2010-11
Gross Margin (GM) 1,654.62 1,491.79
GM % 23.6% 20.8%
Advertising & Sales 330.70 469.12
Promotion
A&P % 4.7% 6.5%
Gross Margin of the Company at Rs 1,654.62 MM was 11% higher than prior
year of Rs 1,491.79 MM reflecting the positive impact of pricing & mix.
Improved efficiencies in A&P spends enabled the Company to deliver
enhanced Gross Margin spend with a lower A&P of 4.7% of Sales. Profit
before Tax increased by 7% with Profit after Tax by 14% as your Company
received tax benefits which included set off on account of R&D
investments at the new R&D facility in Andhra Pradesh.
2. DIVIDEND
Given the continued strong performance of the Company, your Directors
are pleased to recommend a Dividend of Rs1.75/- per equity share of the
face value of Rs10/- each for the period ended 31st March, 2012 subject
to the approval of the share holders at the Annual General Meeting to
be held on 25th July, 2012.
(Rs.Millions)
2011-12 2010-11
Profit After Tax 361.43 317.76
Profit brought forward 773.42 529.06
from Previous year
Surplus available for 1,134.85 846.82
Appropriation
Transfer to General
Reserve 27.11 23.83
Proposed Dividend for the 42.65 42.65
Financial year at the
rate of Rs 1.75 /- each
(previous year: Rs 1.75/-)
Tax on Proposed Dividend 6.92 6.92
Forward to the following 1,058.17 773.42
year
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit or loss
of the Company for that period;
iii) they have taken proper and sufficient care for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv) they have prepared the annual accounts on a going concern basis.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors' Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certification as required by Clause 49 of the Listing
Agreement.
5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from Members on the Annual Report and Accounts, this
report includes MD&A as appropriate so that duplication and overlap
between the Directors' Report and a separate MD&A is avoided and the
entire material is provided in a composite and comprehensive document.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
Despite high interest rates and their consequent cascading impact on
the broader economy, the overall trends in food industry consumption
remained positive. Continuing robust growth of the processed foods
industry in India will require investments in two key areas - building
of food processing capabilities and expansion of distribution reach.
Together, these will ensure that we are capable of reaching out to
large numbers of Indian consumers with products that are relevant,
affordable and profitable.
Cost pressures driven by higher commodity prices continued through the
year. However, your Company was able to successfully overcome the
challenges through focus on the key growth drivers of improved margin
and distribution expansion of value added products, in line with the
goal of being amongst India's "Best Performing Most Respected Food
Companies".
7. PRODUCT CATEGORIES
7.1 Edible Oils:
During FY'12, the Company continued to focus brand support behind the
flagship Sundrop Heart product with the clear and technically
established promise of Cholesterol reduction. This has been extremely
well received by consumers and continued to deliver strong volume
growth for Sundrop Heart. Your Company successfully introduced a
Cooking Spray, a unique and innovative product which enables consumers
to have an easy non-stick cooking experience besides an attractive low
calorie proposition of 2 calories per spray, and we are continuing to
expand distribution and acquire new consumers for this product using a
low investment strategy. In addition, the Company also launched Sundrop
Nutrifit to support the expansion of our distribution reach. The
Crystal brand, largely sold in Andhra Pradesh, also registered a strong
performance in both volumes and profits.
7.2 Snacks:
Your Company continued its focus on Act II Popcorn. The year saw the
successful introduction of Savory Ready to Eat Popcorn to support the
expansion of distribution expansion and consumer acquisition for the
Act II brand. The introduction of this product will enable your Company
to leverage a large and rapidly growing out of home consumption market
to expand the Act II in home Instant Popcorn business in a profitable
and sustained manner.
7.3 Spreads:
Sundrop Peanut Butter continued to perform well. Work is underway in
the state of Gujarat, to set up a plant for local manufacture of the
product. The investment reflects your Company's commitment to
participate and lead the development of new categories in the Indian
food market and establish a strong position in the growing processed
foods industry in India.
7.4 Puddings & Desserts:
Snack Break chocolate pudding continued to perform well. Your Company
is making progress towards identifying options for local manufacture
for expansion into this category.
7.5 Convenience Meals:
Your Company successfully seeded a limited investment entry into the
Convenience Meals segment with the introduction of Ready to Eat Indian
foods, consistent with the strategy of creating a broad based portfolio
which enables us to leverage longer term trends in food consumption
patterns in India.
The consumer response has been excellent and we are continuing to
extend our on shelf presence.
8. RESEARCH, QUALITY & INNOVATION (RQI)
Your Company continues to focus on innovation as a driver of growth. In
addition to the introduction of a unique Cooking Spray and launch of
Ready to Eat Popcorn and Convenience Meals, FY'12 also saw the
establishment of a new R&D facility in Andhra Pradesh. The facility
will enable the creation, testing and launch of new products.
9. CONSERVATION, TECHNOLOGY AND FOREIGN EXCHANGE & EMPLOYEE
PARTICULARS
A Statement giving details of conservation of energy, technology
absorption, exports and foreign exchange earnings and outgo in
accordance with the Companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988, as required under section 217(1)(e)
of the Companies Act, 1956, together with particulars of Employees as
required under Section 217 (2A) of the Companies Act, 1956 and
Companies (Particulars of Employees) Amendment Rules, 2011 is attached
and forms part of this report.
10. HUMAN RESOURCES
10.1 To deliver against the vision of being amongst India's "Best
Performing, Most Respected Foods Companies" it is imperative that we
have a highly engaged organization. Your Company continued to show
strong improvement in the area of employee engagement with a score of
76% as measured in a survey conducted by Hewitt Associates, bringing us
into the top league of FMCG companies in India on Employee Engagement.
10.2 In line with the "Promote from Within" philosophy adopted 4
years ago, 47% of all vacancies during the year were filled through
internal talent. In addition, the high level of employee engagement
resulted in Employee Referral accounting for another 21% of all
recruitment. The balance 32% was largely accounted for by new hires.
11. PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and the Rules there under in respect of the employees who were in
receipt of remuneration aggregating Rs 60 lakhs or more or were employed
for part of the year and were and in receipt of remuneration
aggregating Rs 5 lakhs per month or more during the financial year
ending 31st March, 2012 is provided in the Annexure forming part of
this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report
and Accounts are being sent to the Members excluding the aforesaid
Annexure. The Annexure is available for inspection by Members at the
Registered Office of the Company during business hours on working days
up to the date of the ensuing AGM, and if any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary whereupon a copy would be sent.
12. EMPLOYEE STOCK OPTION PLAN
Details of the shares issued under the Agro Tech Employee Stock Option
Plan, as also the disclosures in compliance with Clause 12 of the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in the
Annexure to this Report.
13. CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to making a contribution to the societies in
which we live and work. Focus has been maintained on "Feeding Children
Better", a program to address malnutrition among the under privileged
children studying in schools with no aid. Under the program, children
are provided with one nutritious meal a day. Currently the program
covers more than 1500 under privileged children including physically
challenged children.
Your Company also created opportunities during the year to citizens of
India who are disadvantaged. By working with 5 Deaf and Dumb societies
across India, we were able to continue to provide opportunities for
disadvantaged persons through employment as merchandisers in the modern
trade channel.
14. INFORMATION SYSTEMS
The increasing use of technology and automation is critical for the
Company to be both efficient and effective. During FY'12 there was an
increasing use of the Oracle applications which included forecasting
and production planning. The Company also used Oracle applications for
tracking capital expenditure and moved to paperless approval of
Accounts payable integrated with Oracle and linked to our banking
partners. We also made significant progress in the automation of our
distributors.
15. FINANCE AND ACCOUNTS
15.1 Internal Controls
The Company has a robust system of internal controls commensurate with
the size and nature of its operations, to ensure orderly and efficient
conduct of business. These controls ensure safeguarding of assets,
prevention and detection of fraud and error, accuracy and completeness
of accounting records, timely preparation of reliable financial
information and adherence to the Company's policies, procedures and
statutory obligations.
Your Company has established standard operating procedures for smooth
and efficient operations in addition to ensuring internal controls.
Your Company has also documented:
- a comprehensive Code of Conduct for the Board Members and employees
of your Company
- An Employee Handbook
- Whistle Blower Policy defined to provide channel of communication
without fear
- Comprehensive framework for Risk Management, and
- CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has reappointed Deloitte Haskins & Sells as its Internal
Auditor to ensure adequacy of internal control systems and make
recommendations thereto. Audit reports are circulated to Management,
which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the
performance as reported by Auditors. The Internal and External
Auditors also attend the meetings and convey their views on the
adequacy of internal control systems as well as financial disclosures.
The Audit Committee also issues directives and/or recommendations for
enhancement in scope and coverage of specific areas, wherever felt
necessary.
15.2. Cautionary Statement
Statements in this Directors' Report and Management Discussion and
Analysis describing the Company's
objectives, projections, estimates and expectations may constitute
"forward looking statements" within the meaning of applicable laws
and regulations. Actual results may differ materially from those
either expressed or implied.
15.3 Outlook
Expansion of distribution combined with enhancement of manufacturing
capacities should enable your Company to continue to see positive
momentum in the business in FY'13. The key growth drivers for the
Company will continue to be Sundrop Heart and Act II Popcorn. With the
commencement of local production of Peanut Butter and availability of
low cash ring SKU's, we will also commence investing behind the Spreads
category. New products such as Ready to Eat Popcorn and Sundrop
Nutrifit will enable us to steadily expand distribution and therefore
consumer acquisition for the growth drivers by funding the last mile
between our distributors and the retail trade and in turn enable us to
continue to deliver sustained and profitable growth.
16. DIRECTORS
In accordance with the Provisions of Article 143 of the Articles of
Association of the Company, Lt. Gen. D. B. Singh and Mr. Sanjaya
Kulkarni retire by rotation and being eligible, offer themselves for
re-appointment. A brief profile of Lt. Gen. D.B. Singh and Mr. Sanjaya
Kulkarni is given in the notice of the 25th Annual General Meeting.
During the year Mr. David Alan Palfenier representing the interests of
CAG-Tech (Mauritius) Limited has resigned as Director and Chairman of
the Company.
The Directors place on record their appreciation of the valuable
services rendered and wise counsel given by Mr. David Palfenier during
his tenure of Office as Director and Chairman.
17. AUDITORS
M/s. BSR and Co., Chartered Accountants, Statutory Auditors of your
Company, hold office until the conclusion of the 25th Annual General
Meeting and are recommended for reappointment. The Company has received
a certificate from M/s. BSR and Co., to the effect that their
appointment, if made, would be within the limits prescribed under
Section 224 (1B) of the Companies Act, 1956.
18. SUBSIDIARY COMPANY
Your subsidiary, Sundrop Foods India Limited has continued to perform
the role of aiding the expansion of distribution and display of your
products. At the end of FY'12 the number of salesmen on the rolls of
the Company were 278.
19. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers and all
other stakeholders towards performance of the Company during the year
under review.
On behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
Date: 26th April, 2012
Mar 31, 2011
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the fnancial year ended 31st March,
2011.
1. PERFORMANCE OF THE COMPANY
1.1 Results
Your Companys performance for the year ended 31st March, 2011 is as
follows:
(Rs. Millions)
2010-11 2009-10
Net Sales 7,187 6,496
Other Income 69 105
Total Income 7,256 6,601
Operating Expenses 6,912 6,239
PBDIT 344 362
Depreciation 46 30
Interest 1 1
Exceptional Item 174 Ã
profit Before Tax (PBT) 471 331
Taxes 153 80
profit After Tax (PAT) 318 251
Net Sales for the year at Rs. 7,187 MM are higher than Prior Year by 11%
refecting continued strong volume growth in Act II Popcorn and higher
pricing across the Sundrop and Crystal branded edible oils partly
offset by lower sales of the Rath brand which was divested in December,
2010. Steady improvement in profitability continued with profit after tax
up by 26% versus previous year and profit before tax up by 42% versus
the prior year.
1.2 Key Indicators
(Rs. Millions)
2010-11 2009-10
Gross Margin (GM) 1,492 1,505
GM % 20.8% 23.2%
Advertising & Sales 469 614
Promotion
A&P % 6.5% 9.5%
Gross Margin of the Company at Rs. 1,492 MM was marginally lower than
prior year of Rs. 1,505 MM refecting a signifcant increase in commodity
prices which the Company was largely able to offset through Pricing,
Volume Growth and Product Mix. Improved effciencies in A&P spends
enabled the Company to reduce A&P spend as a percentage of sales to 6%
and together with the one-time profit on divestiture of Rath this
enabled the Company to deliver a growth of 42% in profit Before Tax.
Effective Tax Rate for the Company increased to 33% vs Prior Year of
24% as the Company had taken full beneft of Unabsorbed Depreciation and
MAT credit during the year ended 31st March, 2011. Accordingly, profit
after tax has increased by 26%.
2. DIVIDEND
Given the strong performance of the Company, your Directors are pleased
to recommend a Dividend of Rs. 1.75/- per equity share of the face value
of Rs. 10/- each for the period ended 31st March, 2011 subject to the
approval of the share holders at the Annual General Meeting to be held
on 27th July, 2011.
(Rs. Millions)
2010-11 2009-10
profit After Tax 318 251
profit brought forward 529 333
from Previous year
Surplus available for 847 584
Appropriation
Transfer to General
Reserve 24 13
Proposed Dividend for the 43 36
Financial year at the
rate of Rs. 1.75 /- each
(previous year: Rs. 1.50/-)
Tax on Proposed Dividend 7 6
Forward to the following 773 529
year
3. RESPONSIBILITY STATEMENT
The Directors confrm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same;
ii) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the fnancial year and of the profit or loss of
the Company for that period;
iii) they have taken proper and suffcient care for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv) they have prepared the annual accounts on a going concern basis.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certifcation as required by the amended Clause 49 of the
Listing Agreement.
11. PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and Companies (Particulars of Employees) Amendment Rules, 2011, in
respect of the employees who were in receipt of remuneration
aggregating Rs. 60 lakhs or more or were employed for part of the year
and were in receipt of remuneration aggregating Rs. 5 lakhs per month or
more during the fnancial year ending 31st March, 2011 is provided in
the Annexure forming part of this Report. In terms of Section
219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
Members excluding the aforesaid Annexure. The Annexure is available for
inspection by Members at the Registered offce of the Company during
business hours on working days up to the date of the ensuing AGM, and
if any Member is interested in obtaining a copy thereof, such Member
may write to the Company Secretary whereupon a copy would be sent.
12. EMPLOYEE STOCK OPTION PLAN
Details of the shares issued under the Agro Tech Employee Stock Option
Plan, as also the disclosures in compliance with Clause 12 of the
Securities and
Exchange Board of India (Employees Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 are set out in the Annexure to
this Report.
13. CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to making a contribution to the societies in
which we live and work. Focus has been maintained on "Feeding Children
Better", a program to address malnutrition among the under privileged
children studying in schools with no aid. Under the program, children
are provided with one nutritious meal a day. Currently the program
covers more than 1500 under privileged children including physically
challenged children.
Your Company also created opportunities during the year to citizens of
India who are disadvantaged. By working with 5 Deaf and Dumb societies
across India, we were able to create opportunities for c 50
disadvantaged persons through employment as merchandisers in the modern
trade channel.
14. INFORMATION SYSTEMS
The increasing use of technology and automation is critical for the
Company to be both effcient and effective. During FY11 there was an
increasing use of the Oracle operating system including automation of
Accounts Payable and linking to our banking partners.
15. FINANCE AND ACCOUNTS
With the complete exit by your Company from Trading operations,
starting from FY 10-11, your Company considers all the product
categories as the primary segment for reporting.
15.1 Internal Controls
The Company has a robust system of internal controls commensurate with
the size and nature of its operations, to ensure orderly and effcient
conduct of business. These controls ensure safeguarding of assets,
prevention and detection of fraud and error, accuracy and completeness
of accounting records, timely preparation of reliable fnancial
information and adherence to the Companys policies, procedures, and
statutory obligations.
Your Company has established standard operating procedures for smooth
and effcient operations in addition to ensuring internal controls. Your
Company has also documented:
l a comprehensive Code of Conduct for the Board Members and employees
of your Company
l An Employee handbook
l Whistle Blower policy defned to provide channel of communication
without fear
l Comprehensive framework for Risk Management and
l CEO/CFO Certifcation for Financial Reporting Controls to the Board
The Company has reappointed Deloitte Haskins & Sells as its Internal
Auditor to ensure adequacy of internal control systems and make
recommendations thereto. Audit reports are circulated to Management,
which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the
performance as reported by Auditors. The Internal and External
Auditors also attend the meetings and convey their views on the
adequacy of internal control systems as well as fnancial disclosures.
The Audit Committee also issues directives and/or recommendations for
enhancement in scope and coverage of specifc areas, wherever felt
necessary.
15.2. Cautionary Statement
Statements in this Directors Report and Management Discussion and
Analysis describing the Companys objectives, projections, estimates,
and expectations may constitute "forward looking statements" within the
meaning of applicable laws and regulations. Actual results may differ
materially from those either expressed or implied.
15.3 Outlook
The continuing positive economic momentum in the country and strong
performance of our key growth drivers of Act II Popcorn and Sundrop
Heart mean that we expect to see positive momentum in the business in
FY12. High commodity prices will remain a challenge in the next year
which will be addressed through focus on products with higher pricing
power. We also expect to see a further roll out of new products
leveraging the broad portfolio of products available with ConAgra Foods
and through local innovation. This will be done after comprehensive
consumer research and enable us to capitalise on the changing food
habits of the South Asian consumer. These will be supported in a manner
that enables us to optimize the investments that we make in A&P to
enable us to deliver steady and sustained profitable growth.
16. DIRECTORS
During the year Mr. Gregory Carl Estep and Mr. Alejandro Castro
representing the interests of CAG-Tech (Mauritius) Limited and Mr.
Nihal Kaviratne, CBE, a Non-Executive Independent Director, have
resigned as Directors of the Company.
Your Company has appointed Mr. David Alan Palfenier and Mr. Patrick
Douglas Linehan as Additional Directors pursuant to Section 260 of the
Companies Act, 1956 and Article 130 of the Articles of Association of
the Company with effect from 28th July, 2010. Mr. David Alan Palfenier
and Mr. Patrick Douglas Linehan represent the interests of CAG- Tech
(Mauritius) Limited. Mr. David Alan Palfenier was also nominated as
Chairman by your Board. Mr. Narendra Ambwani was appointed as an
Additional Director approved by your Board of Directors through
circulation with effect from 6th April, 2011. He is a Non- Executive
Independent Director of your Company.
Mr. Arun Bewoor was appointed as a Director with effect from 21st
October, 2009 due to the sudden demise of Mr. Satish Lal Tandon,
pursuant to the Provisions of Section 262 of the Companies Act, 1956
and Article 129 of the Articles of Association of the Company.
They all hold offce up to the date of the ensuing Annual General
Meeting. Notice together with the deposit, as required under Section
257 of the Companies Act, 1956 has been received from Members proposing
the appointment of Mr. David Alan Palfenier, Mr. Patrick Douglas
Linehan, Mr. Narendra Ambwani and Mr. Arun Bewoor as Directors of the
Company at the Annual General Meeting. A brief profle of these
Directors is given in the Notice of the 24th Annual General Meeting.
In accordance with the Provisions of Article 143 of the Articles of
Association of the Company, Mr. Michael D Walter retires by rotation
and being eligible, offers himself for re-appointment. A brief profle
of Mr. Michael D Walter is given in the Notice of the 24th Annual
General Meeting.
The Directors place on record their appreciation of the valuable
services rendered and wise counsel given by Mr. Gregory Carl Estep, Mr.
Alejandro Castro and Mr. Nihal Kaviratne, CBE during their tenure of
Offce as Directors.
17. AUDITORS
M/s. BSR and Co., Chartered Accountants, Statutory Auditors of your
Company, hold offce until the conclusion of the 24th Annual General
Meeting and are recommended for reappointment. The Company has received
a certifcate from M/s. BSR and Co., to the effect that their
appointment, if made, would be within the limits prescribed under
Section 224 (1B) of the Companies Act, 1956.
18. SUBSIDIARY COMPANY
Your subsidiary, Heera Seeds Trading and Warehousing Limited was
renamed during the year as Sundrop Foods India Limited. Over the last 6
months the Company has recruited c 500 salesmen and consultants who are
responsible for increasing the distribution and display of your
products across the country.
19. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers, ConAgra
Foods Inc. and all other stakeholders towards performance of the
Company during the year under review.
On behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
Mar 31, 2010
The Directors hereby present their Annual Report, together with the
audited accounts of the Company for the financial year ended 31st
March, 2010.
1. PERFORMANCE OF THE COMPANY
7.7 Results
Your Companys performance for the year ended 31st March, 2010 is as
follows:
(Rs. Millions)
2009-10 2008-09
Net Sales 6,496 7,736
Other Income 105 111
Total Income 6,601 7,847
Operating Expenses 6,239 7,582
PBDIT 362 265
Depreciation 30 24
Interest 1 5
Exceptional Item -- (40)
Profit Before Tax (PBT) 331 276
Taxes 80 68
Profit After Tax (PAT) 251 208
Net Sales for the year at Rs.6,496 Million are lowerthan Prior Year by
16% reflecting the impact of (a) lower unit price realization on the
Rath & Crystal brands where lower commodity prices were passed on to
the consumer and (b) a mix of price and volumes for the Sundrop oils
portfolio as a consequence of our margin improvement program. This was
offset in part by robust growth in Act II popcorn. Steady improvement
in profitability continued with profit after tax up by 21 % versus
previous year and Profit before tax up by 20% versus the previous year.
1.2 Turnover by Segment (Rs. Millions)
2009-10 2008-09
Branded Foods 5,534 6,253
Sourcing & Institutional Business (SIB) 962 1,483
7.3 Key Indicators
Gross Margin (GM) 1,505 1,310
GM % 23.2% 16.9%
Advertising & Sales Promotion 614 515
A&P % 9.5% 6.7%
Gross Margin of the Company improved from Rs. 1,310 Million to Rs.
1,505 Million driven by improved mix and pricing recovery. The
incremental
Gross Margin earned during the year was partly invested in increased
A&P (supporting new product launches, volume growth in Act II popcorn
and margin improvement) and partly used to improve profitability.
2. DIVIDEND
Given the strong performance of the Company, your Directors are pleased
to recommend a dividend of Re. 1.50 per equity share of the face value
of Rs. 10/- each for the period ended 31st March, 2010 subject to the
approval of the share holders at the Annual General Meeting to be held
on 28th July, 2010.
(Rs. Millions)
2009-10 2008-09
Profit After Tax 251 208
Profit brought forward 333 153
from previous year
Surplus available for 584 361
appropriation
Transfer to General Reserve 13 --
Proposed dividend for the 36 24
financial year at the
rate of Re. 1.50 each
(previous year: Re. 1 /-)
Tax on proposed dividend 6 4
Cetained profit carried 529 333
forward to the following year
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same;
ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit or loss
of the Company for that period;
iii) they have taken proper and sufficient care for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv) they have prepared the annual accounts on a going concern basis.
4. CORPORATE GOVERNANCE
In terms of the Listing Agreement, a report on Corporate Governance
along with Auditors Report on its compliance is annexed, forming part
of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the
Company in connection with compliance with the Code of Conduct, and
also CEO/CFO Certification as required by the amended Clause 49 of the
Listing Agreement.
5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from Members on the Annual Report and Accounts, this
report includes MD&A as appropriate so that duplication and overlap
between the Directors Report and a separate MD&A is avoided and the
entire material is provided in a composite and comprehensive document.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
The year saw a gradual improvement in the economy with an improved
economic outlook for the country. However, while consumer confidence
returned there was still considerable uncertainty, necessitating that
while we could continue to be aggressive in driving the growth and
testing of new categories there should also be a sense of caution in
pricing in existing categories. Together with a steady hardening of
commodity prices, this caution resulted in an increasing pressure on
margins as the year progressed.
Your Company responded to this challenging environment by on the one
hand working to reduce the cost of entry into new categories and on the
other introducing variants to cover more price points in existing
categories. This was accompanied by a continued strengthening of retail
coverage in line with the goal of being amongst Indias "Best
Performing Most Respected Foods Companies."
7. PRODUCT CATEGORIES
7.7 Branded Foods:
7.1.1 On a full year basis Net Sales of the Branded Foods business at
Rs. 5,534 Million was lower than prior year by 11% reflecting a drop in
price per unit on Rath & Crystal due to lower commodity prices and
lower pricing/volume on Sundrop due to our focus on margin improvement.
A continued strengthening of volumes in Sundrop during the year meant
however that we ended 2009-10 successfully consolidating your Companys
Gross Margin at a level of 20% and a return to top line growth against
previous year by the fourth Quarter - Net Sales for Quarter 4 were up
8% against the previous year on the Branded Foods Business.
7.1.2 In the Edible Oils category your Company focused on volume
opportunities through the launch of new variants to increase presence
across price points and address unmet consumer needs. Both the new
variants launched viz. Sundrop Goldlite and Sundrop Freshlite have been
well received by consumers.
7.1.3 In the Snacks Category your Company continued its focus on ACT II
Popcorn, through sustained national media presence for the brand,
significant increase in retail distribution and increasing awareness of
the category.
7.1.4 In the Hydrogenated Vegetable Oils category, your Company
continued to effectively manage the Rath brand.
7.1.5 In March 2009, your Company had entered the Bread Spreads
category with the launch of Sundrop Peanut Butter. In FY10 your
Company continued to develop this category with investments behind the
brand. Your Company also started work on building the Desserts &
Puddings category in India with the launch of Sundrop Snack Break, a
shelf stable pudding which has been well received by consumers.
7.2 Sourcing & Institutional Business:
Trading operations in Oils were progressively reduced and as a
consequence the segment turnover was reduced from Rs. 1,483 Million in
2008-09 to Rs. 962 Million in 2009-10. This is part of the de-risking
of the portfolio and consistent with our choice of focusing on the
Branded Foods Business.
8. RESEARCH, QUALITY & INNOVATION (RQI)
Your Company successfully launched two new variants of oils under the
Sundrop portfolio, viz. Sundrop Goldlite and Sundrop Freshlite. Both
the variants had new oil species, Corn Oil in GoldLite and Canola Oil
(Imported Rapeseed Oil) in FreshLite.
To increase penetration of the growing popcorn category, your Company
also introduced a Rs. 2/- sachet in Andhra Pradesh which is currently
under test market.
9. CONSERVATION, TECHNOLOGY AND FOREIGN EXCHANGE
A Statement giving details of conservation of energy, technology
absorption, exports and foreign exchange earnings and outgo in
accordance with the companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988, as required under section 217(1
)(e) of the Companies Act, 1956, is attached and forms part of this
report.
10. HUMAN RESOURCES
10.1 Developing a High Performing organization is a key requirement to
delivering against our vision of being amongst IndiaYBest Performing,
Most Respected Foods Companies".Your Company continued to show strong
improvement in the area of employee retention with key talent attrition
now standing at less than 5%.
10.2 To improve communication with the front line sales force and
enhance analytical capabilities and initiative execution, your Company
equipped all sales officers of the Company with laptop computers.
10.3 Your Company continued to work with a "Promote from Within" policy
supported by strong capability building initiatives and 40% of all
vacancies during the year were filled through internal talent.
10.4 Building a common corporate culture and the right set of values is
a key component of creating a high performance organization. Your
Company has identified the theme of "Make a Difference" as the pillar
for our activities and a full scale roll out of this has been done
during the year.
11. PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and the Rules there under in respect of the employees who were in
receipt of remuneration aggregating Rs. 24 lakhs or more or were
employed for part of the year and were in receipt of remuneration
aggregating Rs. 2 lakhs per month or more during^he financial year
ending 31 st March, 2010 is provided in the Annexure forming part of
this Report. In terms of Section 219(1) (b)(iv) of the Act, the Report
and Accounts are being sent to the Members excluding the aforesaid
Annexure.The Annexure is available for inspection by Members at the
Registered office of the Company during business hours on working days
up to the date of the ensuing AGM, and if any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary whereupon a copy would be sent.
12. EMPLOYEE STOCK OPTION PLAN
Details of the shares issued under the Agro Tech Employee Stock Option
Plan, as also the disclosures in compliance with Clause 12 of the
Securities and Exchange Board of India (Employees Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in the
Annexure to this Report.
13. CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to making a contribution to the societies in
which we live and work. Focus has been maintained on "Feeding Children
Better", a program to address malnutrition among the under privileged
children studying in schools with no aid. Under the program, children
are provided with one nutritious meal a day. Currently the program
covers more than 1500 under privileged children including physically
challenged children.
Your Company has been recognized by the Bombay Stock Exchange for
having the Best Corporate Social Responsibility Practices at the 5th
Social and Corporate Governance Awards 2010.
14. INFORMATION SYSTEMS
Significant enhancements were made during the year in the area of
information systems. The Oracle operating system was upgraded to
improve the quality of information available, eliminate manual
interfaces, and enable faster access to information. This has
considerably improved the quality and speed of decision making and
aided significantly the progress achieved by your Company in the area
of profitability.
15. FINANCE AND ACCOUNTS
15 1 Segment Wise Results
Your Company continued to see steady improvement in profitability
driven by focus on the Branded Foods Business.
The audited financial results of the two segments for the year ended
31st March, 2010 are:
Segment-wise Revenue, Results and Capital Employed
(Rs.Millions)
S.No. Particulars 2009-10 2008-09
1. Segment Revenue
a) Branded Foods 5,534 6,253
b) SIB 962 1,483
Sales from Operation 6,496 7,736
2. Segment Results
Profit / Loss before Tax
and interest from each segment
a) Branded Foods 511 422
b) SIB 9 26
520 448
Less:
i) Interest 1 5
ii) Other Un-allocable Expenditure 188 167
net off un-allocable Income
Total Profit Before Tax 331 276
3. Capital Employed
Segment Assets-Segment Liabilities
a) Branded Foods 581 468
b) SIB 2 4
c) Other un-allocable net assets 923 826
Total Capital Employed 1,506 1,298
75.2 Internal Controls
The Company has a robust system of internal controls commensurate with
the size and nature of its operations, to ensure orderly and efficient
conduct of business. These controls ensure safeguarding of assets,
prevention and detection of fraud and error, accuracy and completeness
of accounting records, timely preparation of reliable financial
information and adherence to the Companys policies, procedures and
statutory obligations.
Your Company has established standard operating procedures for smooth
and efficient operations in addition to ensuring internal controls.
Your Company has also documented:
à A comprehensive Code of Conduct for the Board Members and employees
of your Company.
à An Employee Handbook.
à Whistle Blower policy defined to provide channel of communication
without fear.
à Comprehensive framework for Risk Management, and
à CEO/CFO Certification for Financial Reporting Controls to the Board.
The Company has reappointed Deloitte Haskins & Sells as its Internal
Auditor to ensure adequacy of internal control systems and make
recommendations thereto. Audit reports are circulated to Management,
which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the
performance as reported by Auditors. The Internal and External Auditors
also attend the meetings and convey their views on the adequacy of
internal control systems as well as financial disclosures. The Audit
Committee also issues directives and / or recommendations for
enhancement in scope and coverage of specific areas, wherever felt
necessary.
75.3 Cautionary Statement
Statements in this DirectorsReportand Management Discussion and
Analysis describing the Companys objectives, projections, estimates,
and expectations may constitute "forward looking statements" within the
meaning of applicable laws and regulations. Actual results may differ
materially from those either expressed or implied.
75.4 Outlook
Your Company had a strong performance in Financial Year "10, with Gross
Margin improving from Rs. 131 crores to Rs. 150 crores and GM
percentage improving from 16.9% to 23.2%. We did however see margin
pressure in the last quarter of the year and expect to continue to face
this in the near term. We will seek to mitigate this through profitable
volume growth in the Oils category driven by a wider variant range,
while we continue to invest behind the key growth driver of Act II
popcorn and lay the foundation for future growth by working on
localization of the new products already launched and increased A&P
efficiencies for future new products.
16. DIRECTORS
Mr. Gregory Carl Estep and Mr. Alejandro Castro were appointed as
Directors with effect from 14th May, 2008 in place of Mr. Ian F Troop
and Mr. Derek L Briffett respectively to represent the interests of
CAG- Tech (Mauritius) Limited, pursuant to the provisions of Section
262 of the Companies Act, 1956 and Article 129 of the Articles of
Association of the Company.
They hold office up to the date of the ensuing Annual General Meeting.
Notices together with the deposits, as required under Section 257 of
the Companies Act, 1956 have been received from Members proposing the
appointment of Mr. Gregory Carl Estep and Mr. Alejandro Castro as
Directors of the Company at the Annual General Meeting. A brief profile
of these Directors is given in the Notice to the 23rd Annual General
Meeting.
Mr. Arun Bewoor was appointed as Director with effect from 21st
October, 2009 due to the sudden demise of Mr. Satish Lai Tandon,
pursuant to the provisions of Section 262 of the Companies Act, 1956
and Article 129 of the Articles of Association of the Company.
In accordance with the Provisions of Article 143 of the Articles of
Association of the Company, Lt. Gen. D.B. Singh and Mr. Sanjaya
Kulkami retire by rotation and being eligible, offer themselves for
reappointment. A brief profile of these Directors is given in the
Notice of the 23rd Annual General Meeting.
17. AUDITORS
M/s. B S R and Co., Chartered Accountants, are recommended for
appointment as the Statutory
Auditors of your Company, to hold office from the conclusion of the
23rd Annual General Meeting until the conclusion of the 24th Annual
General Meeting, in place of M/s. B S R and Associates, retiring
Auditors, who have not offered themselves for reappointment as Auditors
of the Company. The Company has received a certificate from M/s. B S R
and Co., to the effect that their appointment, if made, would be within
the limits prescribed under Section 224 ("IB) of the Companies Act,
1956.
18. SUBSIDIARY COMPANY
There has been no business activity during the year by Heera Seeds
Trading and Warehousing Limited, a non-material unlisted subsidiary of
your Company.
19. APPRECIATION
The Board places on record their appreciation for the contribution of
its customers, employees, distributors, co-packers, suppliers and all
other stakeholders towards performance of the Company during the year
under review.
On behalf of the Board
Sachin Gopal Lt. Gen. D.B. Singh
President & CEO Director
Dr. Pradip Ghosh Chaudhuri
Whole-time Director
Date: 19th May, 2010